While the Federal Reserve adjusted its forward guidance on short-term interest rates in its policy statement Wednesday, former Rep. Ron Paul, R-Texas, doesn't think the central bank should have control over interest rates.

"It's an illusion. I don't think any one individual knows how to plan the economy by manipulating interest rates," he told CNBC. "Interest rates are so important that if you give this power to one small group or one individual, there will be distortion."

The Fed can be responsible for bubbles in asset markets, Paul said.

"Sometimes you have housing bubbles, and sometimes you have housing busts," he said. "Then you have . . . bond bubbles. That's all [the] result of the manipulation of interest rates, which is my real objection to it.

"[A] few people can't be wise enough to dictate the market. That's why socialism always fails." The Fed has a poor track record for its policy decisions, Paul said.

In its policy statement, the Fed dropped the mention of a specific level of unemployment as a threshold for considering an increase in short-term interest rates.

"It [that threshold] is a relic of days of yore," Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds, told Bloomberg News.

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