The Federal Reserve began implementing a rate cut cycle in September after a 4-year hiatus, reigniting enthusiasm in the asset markets. However, Soros' comrade Stanley Druckenmiller expressed concerns that the Fed may have prematurely declared victory over inflation, which could potentially reignite. (Background: Powell 'shatters significant rate cut' expectations: Fed to cut a total of 50 basis points by the end of the year, Dow and S&P continue to reach new highs) (Fed decision cheat sheet: Powell's significant rate cut reasons, Interest Rate dot plot, shift to follow employment) The Federal Reserve (Fed) announced a 2-basis point rate cut on September 19, lowering the Interest Rate to 4.75% to 5%, marking its first rate cut since 2020. It then announced another 1-basis point cut in November, bringing the Interest Rate down to 4.5% to 4.75%. Prior to the Fed rate cuts, the U.S. Benchmark Interest Rate had remained at 5.25% to 5.5% for a year in an attempt to curb persistently high inflation rates. After prolonged efforts, there was indeed a significant decrease in inflation rates in the U.S. According to MacroMicro data, the Fed's preferred inflation gauge, the Personal Consumption Expenditures Price Index (PCE), had dropped to 2.09% in September, approaching the Fed's 2% target. Soros' comrade: Inflation may rebound again Against this backdrop, as reported by MoneyDJ, Stanley Druckenmiller, who orchestrated the shorting of the British pound for Soros' Quantum Fund in 1992, making a profit of $1 billion, expressed concerns in an interview that inflation could reignite: I am a little worried that the Fed declared victory over inflation too soon... With credit spreads tightening, gold prices hitting new highs, and the stock market surging, coupled with no substantial signs of economic weakening (only a small portion turning weaker), I am concerned that inflation may resurface. Druckenmiller pointed out that inflation in the 1970s rebounded after cooling down, and he believes the Fed makes a mistake by excessively relying on economic data, leading to rate cuts during strong economic periods: Whenever inflation cools down, the Fed tends to cut rates to ensure economic growth remains unaffected, rationalizing these actions based on changes in employment reports, but this is a wrong approach. Druckenmiller further stated: The Fed's mission is to avoid a repeat of the 1970s. Fine-tuning policies and worrying about whether the economy will experience a soft landing are not the Fed's responsibilities. I believe that maximizing employment in the long term, not just in the next 3-4 months, is where the Fed's duty lies. Over 70% probability of rate cut slowdown On the other hand, following Trump's election victory and the implementation of his policies, which could lead to a resurgence in inflation, the market generally predicts that the Fed will slow down its rate cuts. According to CME FedWatch data, the market predicts a 64.3% probability of a 1-basis point rate cut in December, with a high probability of the Benchmark Interest Rate remaining above 4.25% to 4.5% in January next year, reaching 73.2%. In other words, there is over a 70% probability that the Fed will only cut rates by 1 basis point in its next two Interest Rate decisions. However, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated in an interview with Fox News last weekend that it is too early to discuss the impact of the new government and new Congress on U.S. Interest Rates, as the Fed follows the strength of U.S. economic growth: Assuming that the current economic growth momentum continues, allowing the U.S. economy to structurally improve productivity, the Fed may cut rates fewer times than expected in the future. Market predicts rate cut probability in January. Source: CME Fedwatch Related reports 20 Central Banks to announce Interest Rate decisions this week! Fed rate cut coincides with U.S. elections, will the market face a tsunami? Powell stands firm: Trump will not resign under pressure, elections do not affect Fed Interest Rate decisions, but will there be changes in the December rate cut? JPMorgan warns: Trump's victory = resurgence of inflation storm, Fed may pause rate cuts in December Soros' comrade warns: High probability of inflation rebound, Fed may be celebrating too early This article was first published on Dynamic BlockTempo, the most influential Blockchain news media.