NEW YORK (TheStreet) -- The volatility seen across the markets in recent weeks is liable to continue until the Federal Reserve hikes interest rates, according to Liz Ann Sonders, chief investment strategist at Charles Schwab.
"I think we are going to see bouts of volatility very similar to what we've seen, at least until we get some sense of if and when the Fed is going to move," said Sonders.
Sonders thinks the Fed's initial rate hike -- whenever it comes -- will be a soothing factor for the markets.
"The Fed, having kept interest rates at zero for as long as they have, has been a depressant from an economic perspective," she said. "If you continue to treatthe economic patient like it's in the trauma room, then that's what the public is going to perceive too."
In her opinion, a departure from crisis-era interest rates may push now-skittish companies toward a more expansion-oriented posture.
"Why would I bother to invest or borrow to expand if I have that opportunity down the road and if our central bank is not giving us a message that they are confident in the economic recovery?" she pondered. "I wonder if [the Fed's rate hike] takes people off the fence -- perhaps businesses will stop borrowing to buy back stock and instead invest longer term."
She also wondered whether the reality of slowly rising rates would put pressure on potential home buyers to pull the trigger and make purchases before mortgage rates edge higher.
When the Fed raises the fed funds rate, other related rates tend to rise as well, which generally pushes mortgage rates higher.
In terms of why the central bank kept interest rates unchanged last week, the Fed cited "global economic and financial developments" in its September statement last week -- largely referring to the weakness seen in China's economy.
"I'm not sure that [the softness in China] was a new story that required the U.S. central bank to act as the central bank for the rest of the world," she said. "Nonetheless, they specifically cited it, so unless we see some calming in those forces, I would guess they stay on hold."
But Sonders isn't too surprised at the economic woes China is seeing. "It is to some degree part of their five year plan to shift their economy from being investment, manufacturing and export led to more consumption led, and that naturally brings lower growth."