The Fed is no longer "the only game in town" anymore when it comes to economic stimulus, since the prospects of a break in D.C. gridlock may finally open the door for a rate hike, analyst Jack Caffrey said Thursday.

"What has the Fed been asking for for years, in every bit of testimony? 'We'd actually like some fiscal stimulus,'" Caffrey told CNBC. "And I think that's what to some extent changed, at least in terms of the market's perception coming out of the election. We might get a stimulus bill, we might actually get tax cuts."



Caffrey, a portfolio manager at JPMorgan Private Bank, told "Squawk Box" that the incoming Republican administration's economic proposals look promising for short-term productivity, but do not address how to maintain it.

"We'd like to see some fixed investments and capital spending, which generally get you longer term and more sustainable productivity, which gets you, hopefully, the earnings growth that drives markets," he said.



In any case, the months before the Trump administration steps in are largely a professional guessing game in many ways, Caffrey said.

"To some extent, we're trying to handicap which way policy goes, trying to handicap which way markets will respond, in which case … we're making a whole series of conditional probabilities based on what we think may happen or may not happen," he said.