Fisher's comments came as futures were pricing around a 70% chance for a quarter-percent cut in March. The market now expects three rate cuts in 2020 as global stock indexes sink on intensified concerns about the coronavirus' economic impact.
"I think the market is getting ahead of itself because the market is dependent on Fed largess," Fisher said on CNBC's "Fast Money Halftime Report."
Fisher, who led the Federal Reserve Bank of Dallas from 2005 to 2015, said the "Fed has created this dependency" among a generation of money managers who were not working in the field during previous moments of economic challenges.
They were not around in 1974, 1987, the late 1990s and "even in 2007, 2008, 2009," he argued.
"They have only seen a one-way street. Of course they're nervous," Fisher said. "The question is, do you want to feed that hunger, keep applying the opioid of cheap and abundant money? Money is already cheap and abundant."
Fisher made his remarks during a volatile session for U.S. stock markets. The declines early were steep, with the Dow Jones Industrial Average briefly dropping more than 900 points, before recovering. The Dow was headed toward its worst weekly performance since the financial crisis, declining more than 8% this week.
More cases continue to appear outside of mainland China, including the first U.S. coronavirus case of unknown origin in Northern California.
The patient didn't have a relevant travel history or come in contact to another patient who had the virus, the Centers for Disease Control and Prevention said Wednesday. That revelation set off fears that an intensified outbreak in the U.S. could be near.
There are more than 82,500 cases of the coronavirus globally and at least 2,810 people have died. As the virus spreads, so too has worry about its potential to slow the global economy.
Fed Vice Chairman Richard Clarida said Tuesday the central bank did not know how much economic impact could result from the coronavirus.
"The disruption there could spill over to the rest of the global economy," he said in remarks delivered in Washington, D.C. "But it is still too soon to even speculate about either the size or the persistence of these effects, or whether they will lead to a material change in the outlook."
But he said the Fed "will respond accordingly" if that outlook changes.
Fisher conceded Thursday he was at the Fed over the stretch during which the "dependency" he lamented was developed.
He also said he was not specifically saying the Fed should not cut interest rates in response to the coronavirus. He said he believed it was a "debatable question."
"I'm not saying I'm against it," he said, adding: "I think we have to consider whether you want to continue whether you want to continue to feed the market in this way."