Former Federal Reserve Governor Larry Lindsey believes the central bank has "no choice" but to "hope, pray, do everything it can" to move the market higher — and to continue its quantitative easing (QE) tactics.

Stocks declined Wednesday as Fed Chairman Ben Bernanke, responding to a question from Rep. Kevin Brady, the Texas Republican who chairs the Joint Economic Committee of Congress, said the flow of purchases could be reduced “in the next few meetings” if the central bank is confident gains in the economy can be sustained, according to Bloomberg.

"I doubt very much that the chairman intended to signal a taper," Lindsey told CNBC. "I think the problem is here is that the Fed has let the genie out of the bottle. They've promised the markets unlimited liquidity and that is what's driving the markets since QE1."

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Lindsey pointed out that if you read Bernanke's testimony or listen to what New York Fed President William Dudley has said recently, "it's very clear that the Fed is not going to taper. That it would take extraordinary conditions for that to happen."

The central bank has said it will maintain bond purchases until the labor market, beset by 7.5 percent unemployment, has “improved substantially.” That’s a departure from prior QE programs that had specified end dates and amounts.

"If we go sideways — remember, the whole QE story is to drive a wealth effect, which ultimately boosts consumption, sufficient to get GDP [gross domestic product] going, the unemployment down," he explained.

"At the moment we have made some progress," Lindsey said. "If you stop it at this point, you will not get what the Fed wants. If the market were to stop, I think we will stall out pretty quickly."

In the past three years, the Fed planned to cut accommodation early in the year, only to boost it again after growth lagged behind its forecasts, Bloomberg reported.

"They have not achieved their targets yet," he said. "You really cannot signal to the market that you're going to cut back."

Policymakers are looking for flexibility, according to Lindsey. "Look at the size of the adjustment we got from the chairman saying the answer to a question that they could possibly begin to taper around Labor Day," he said. "We got a massive worldwide sell-off."

Financial markets worldwide were rocked Thursday after Japanese stocks suffered their biggest drop since the country was hit by a devastating tsunami more than two years ago, The Associated Press reported.

"Imagine if they actually did taper how big the sell-off would be. This is not something they can risk. They should not touch that dial until they are very confident that they had achieved their objectives," he said.

"Once you let the genie out of the bottle you can't get him back in," he added. "You better hope you get your three wishes. They haven't gotten their three wishes yet, and I think they're going to have to continue doing what they're doing and hope and pray they are able to generate a self-sustaining expansion, which we don't have yet."

James Bullard, president of the Federal Reserve Bank of St. Louis, said Thursday he did not think the Fed was "that close" to winding down its stimulus, according to Reuters.

"Even if we do taper, it would still be a very aggressive pace of purchases because we would only be moderating the rate by a small amount," Bullard noted. "I don't think we are actually that close at this point to talking about an exit."

However, other experts expect the Fed to soon begin curbing its easing strategy.

"I think we're looking at a potential tapering in the next few months, probably around September," Bill Gross, co-chief investment officer of fund giant Pimco, told CNBC in a separate interview.

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