He said: "When I first arrived I was scoring but he said I wasn't working hard enough so he took me out of the side.
"Then when I was working hard enough I wasn't scoring. I'm in and out of the side, not used to it and not happy."
Eastwood has had more success with Wales starting three of the last four games and taking his goals tally to four in seven with a brace against Luxembourg on Wednesday.
And McCarthy said a number of clubs were interested in signing Eastwood ahead of Thursday's emergency loan deadline.
"I considered Coventry because Freddy hasn't been playing here," he said.
"But suddenly, it might be me scratching around for a striker if, say, we picked up a couple of injuries at Charlton.
"It's all about us and what's good for the club. He or Stephen Ward or Stephen Elliott may poach the goal that gets us in the play-offs."
Wolves already have Jay Bothroyd on loan at a club at the other end of the Championship table, Stoke, and have Stephen Elliott and Stephen Ward at opposite ends of the recovery trail after injuries.
McCarthy claims former Southend striker Eastwood does not want to leave the club, but that he was interested in a loan move as he has not been starting for Wolves.
"Freddy just wants to play," he added. "There's not a problem between him and me but I just decided the best course of action was to keep him."
