A pedestrian walks past the Federal Reserve building on Constitution Avenue in Washington on March 19, 2019. Leah Millis | Reuters

The U.S. Federal Reserve has sent a "very strong signal" that it's ready to consider cutting interest rates, according to a former Fed governor. Sarah Bloom Raskin, who sat on the Fed board from 2010 to 2014, offered that analysis in light of Chairman Jerome Powell's recent speech in which he said the central bank "will act as appropriate to sustain the expansion." "I think Chairman Powell has given a message to markets that's indicating that a rate cut is coming. This is, in essence, a very strong signal that the FOMC is actually ready to talk about cutting rates," Raskin, who's now a senior fellow at Duke University, told CNBC's "Squawk Box" on Wednesday.

The Federal Open Market Committee (FOMC), which is responsible for setting American monetary policy, is scheduled to next meet on June 18-19 to decide on interest rates. Investors have been predicting that the Fed would cut interest rates, even though the central bank had earlier indicated it expected to hold monetary policy steady throughout the year. Investors calling for rate cuts argued that the ongoing trade war between Washington and Beijing is threatening to slow down the global economy, which would in turn hurt the U.S.

'Elephant in the room'

Morgan Stanley Chief Economist Chetan Ahya believes that whatever policy response the Fed undertakes will likely be "reactive" to U.S. President Donald Trump's subsequent moves in his administration's trade dispute with China. Policy responses cannot be "pre-emptive" because the ramifications of the trade dispute pose an external risk, Ahya told CNBC's "Street Signs" on Wednesday. "It's something that central banks in the developed world as well as policymakers in China cannot pre-empt." Duke University's Raskin said the U.S.-China tariff fight is a risk to the American economy because it could end up hurting manufacturers and consumers. She added: "Of course, we have the elephant in the room, which are these tariffs and the unpredictable nature of them." The threat from the trade war is coming on top of an already slowing economy, she added. The former central banker cited several indicators, such as business investments and demand for U.S.-made goods, that have shown signs of moderating.

Trade war could trigger recession