Economist Mohamed El-Erian believes the Federal Reserve will raise interest rates this summer, despite what the markets think.
"The market is not fully priced for July, and the market is not priced for the possibility of a second hike coming later in the year," said El-Erian, chief economic advisor for Allianz, on an interview with CNBC's "Squawk Box" Monday.
According to the CME Group's FedWatch tool, investors say the chance of a June hike is 26%, while they put the probability of a July raise at 53%.
For his part, El-Erian sees the Fed moving by September – most likely by July. The Federal Open Market Committee will likely hold off on raising rates until after the vote on Britain's European Union membership, El-Erian said.
The economist adds that he expects the Fed to raise rates twice this year and perhaps once or twice next year. Also on Monday, San Francisco Fed President John Williams said that there could be two or three rate hikes in 2016, including one in June, according to a Reuters report.
"This is a Fed that is carrying the burden of all economic policies," El-Erian explained. "They have a small window … to start normalizing [rates], and they intend to take advantage of it."
