Fisher told CNBC that the Fed had not communicated with markets as effectively as it could have.
(Read more: Yellen to be more dovish than 'Helicopter Ben': CNBC survey)
"The real issue that markets care about is the forward guidance, what will we do after we stop this program or slow it and then stop it... I don't think we've been clear enough in our articulation of what we'd like to do," said Fisher.
As the Fed mulls when to scale back its monetary stimulus it poses a number of challenges, one of which is that as it moves closer to a taper, markets sell off, but at the same time maintaining the steady flow of cheap money continues to worsen the U.S. government's fiscal problems. Fisher acknowledged that the Fed was in effect caught in its own trap.
"We could be in our own little monetary trap here because being data dependent doesn't really define for the market place where we will end this program or begin to taper back the current rate of purchases," he said.
(Read more: Treasury vs. Fed: Who's right on the economy?)
However, Fisher added that despite a number of influential critics coming down on the Fed for seemingly making things up as they go along, he reiterated that the bank had a clear "road map" for future monetary policy.
Fisher has been quoted several times in the past criticizing the prospective new Fed chairperson Janet Yellen's views on economy policy.
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But Fisher refused to be drawn on these views in his interview on CNBC, and instead emphasized how a chairman's role has always been to achieve consensus among committee members rather than enforce their own agenda.
"The media places too much weight on what Janet has argued in her individual capacity as a governor. That is not the role she will play any longer, her job is to bring about consensus among the 19 members," he added.
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