Fed chair had the most counterproductive press conference I remember, says former official

The Fed chair, and I mean this as nicely as I can say, had the most counterproductive press conference I remember last Wednesday. Lawrence Lindsey, former federal reserve governor and chief executive officer at The Lindsey GroupLindsey Group, said the central bank's benchmark interest rates are not restrictive enough to battle the highest price pressures in 40 years.

We are not restrictive. In an interview with CNBC's The Exchange on Monday, Lindsey said that we're probably neutral but neutral doesn't cool things off.

The Federal Open Market Committee raised the fed-funds rate by 25 basis points, or 0.25%, to a target range of 4.50% to 4.75% last Wednesday, while stressing that it has more work to bring inflation under control.

In the news conference following the decision, Jerome Powell said financial conditions had tightened significantly over the past year. He acknowledged that the disinflation process has started for the first time. Did Powell give stocks permission to keep climbing? With cuts in store by the end of the year, traders took that as an affirmation that the rate-hike cycle is nearing its end. According to the FedWatch tool, the CME projected a 70% probability that the rate will peak at 5 -- 5.25% by May, followed by almost 50 basis points of cuts by the end of 2023.

The Fed chair, and I mean this, had the most counterproductive press conference I remember last Wednesday, Lindsey said, adding that the central bank needs to stick to its plans to hike rates to above 5%, or maybe a little bit higher. Investors are waiting for Powell's appearance at an event Tuesday sponsored by the Economic Club of Washington, D.C., just a week after his press conference.

I think what he has to do tomorrow - because I am sure he didn't mean for that reaction to occur - he has to recalibrate, he has to recant. He said, "Look folks we have to have higher real interest rates, and it's as simple as that," Lindsey said.

On Monday, U.S. stocks ended up modestly down after Friday s employment report showed an unexpectedly strong surge in January nonfarm payrolls, which reversed Wall Street's perception that the end of the Fed's rate increases is near. The S&P 500 SPX lost 0.6%, while the Dow Jones Industrial Average DJIA declined 0.1% and the Nasdaq Composite COMP fell 1%.