NEW YORK (TheStreet) -- The Federal Reserve needs to start raising interest rates now because the central bank is out of tools should the global economy enter a recession over the next year.

"If we enter another global recession in the next 12 to 18 months and interest rates are at record lows and we have all of this quantitative easing in the markets, the central bank doesn't really have anything left in its arsenal," said Craig Erlam, a senior market analyst with Oanda, based in London.

Another global recession isn't so far-fetched. Citigroup analysts issued a note saying the chances of a global recession now stand at 55% on the heels of the weakness seen in emerging markets, most notably China.

Citigroup Chief Economist Willem Buiter echoes the feeling that central banks are out of tools to assuage the pain of a looming recession.

But worries that China won't meet its 7% targeted growth rate, which has caused unprecedented volatility across the markets in recent weeks, leaves investors to believe the Fed will delay its rate hike, which many economists expect to come next week during its September meeting.

The probability of the Fed lifting rates in September stands at 24%, according to CME Group futures data. A December raise in interest rates has a 61% likelihood.

Despite China and the Fed, stocks are up across the globe, following weeks of unprecedented price swings. The broad S&P 500 rose 2.5% on Tuesday.

"I think the rally at the moment is being driven entirely by expectations that growth in Asia will be propped up by Chinese and Japanese authorities," said Gennadiy Goldberg, a U.S. rates strategist at TD Securities, based in New York.

Stocks in China rose 2.3% on Wednesday and almost 3% on Tuesday. China's Ministry of Finance announced plans to beef up its infrastructure spending in an effort to prop up its economy.

Goldberg sees the gains seen across the market in recent sessions to come under pressure as the market shifts focus to the Fed's closely watched meeting next Wednesday and Thursday.