The Fed should stay the course on rates: Feldstein

The Fed should stick to its plan, and raise rates four time this year, Martin Feldstein, former chairman of the Council of Economic Advisers, told CNBC's "Power Lunch" on Thursday.

The comments came as the central bank held the line Wednesday, however, while many market watchers consider that the Fed will not raise until May, Feldstein, now a Harvard professor, said the Federal Open Market Committee isn't pointing in that direction.

"I didn't read anything in their statement that made me think that they were walking away form an increase in March," he said.

After the Fed decision on Wednesday, the markets fluctuated before seeing a sharp decline; the three major indexes as of Wednesday's close were on pace for their fourth negative week in the last five. The Dow sank 233 points, the S&P 500 fell 21 and the Nasdaq 100 points. All major indexes were up in late trading Thursday.

Bond expert Bill Gross told CNBC on Wednesday that the markets were disappointed in the Fed's decision. Gross, lead portfolio manager of the Janus Global Unconstrained Bond Fund, added that "Stocks are leaning towards the impression that growth is slowing" in the U.S.

Ahead of Friday's real GDP report, Feldstein said that he isn't worried about the pace that the U.S. economy is growing.

"We are going to get a terrible number for the fourth quarter in a few days, it's going to come in under 1 percent," he said, adding that this is related to inventory correction and net exports.

Market conditions

Despite his forecast of discouraging economic news, Feldstein told CNBC that the Fed will be data dependent, but it should steer clear of designing economic policies driven by market data.

"I think that'll be a big mistake, it would be a kind of Fed put," adding that the impression of a Fed put would support overpricing of equities.

In the same vein, Ryan Sweet, economist at Moody's Analytics, thinks that Wednesday's statement wasn't dovish about financial markets.

"Or risk[ed] creating a 'Yellen put' — offering reassurance to traders that the Fed stands ready to help markets irrespective of what is going on in the economy," he said in a note Wednesday commenting on the FOMC statement.

Like Feldstein, Sweet noted that stronger language about market conditions "would be policy error and could make future monetary policy tightening more difficult."