The Federal Reserve began implementing its long-awaited interest rate cut cycle in September after four years, reigniting enthusiasm in the asset markets. However, Soros's ally Stanley Druckenmiller stated that the Fed's announcement of victory over inflation may be premature, and inflation could potentially resurge. (Background: Powell 'shatters expectations for significant rate cuts': Fed has cut rates by a total of 50 basis points by the end of the year, with the Dow and S&P continuing to hit new highs) (Additional background: Fed decision-making cheat sheet: Reasons for Powell's significant rate cut of 2 basis points, interest rate dot plot, shift in focus to employment) The Federal Reserve (Fed) announced a 2 basis point rate cut on September 19, lowering rates to 4.75% to 5%, initiating its first rate cut since 2020. It then announced another 1 basis point cut in November, bringing rates down to 4.5% to 4.75%. Before the Fed's rate cuts, the U.S. benchmark interest rate had been held steady at 5.25% to 5.5% for a year, aiming to suppress the persistently high inflation rate. After long efforts, inflation in the U.S. has indeed seen significant decreases. According to MacroMicro data, the Fed's preferred inflation indicator, the Personal Consumption Expenditures Price Index (PCE), saw its annual growth rate fall to 2.09% in September, very close to the Fed's target of 2%. Soros's ally: Inflation may bounce back again Against this backdrop, according to MoneyDJ reports, Stanley Druckenmiller, who orchestrated the short-selling of the British pound for Soros's Quantum Fund in 1992, making a profit of $1 billion, expressed concerns during an interview that inflation may resurge: I am a bit worried that the Fed declared victory over inflation too early... As credit spreads tighten, gold prices hit new highs, and the stock market soars, along with no substantial signs of economic weakening (only a small part showing weakness), it makes me worry that inflation may rise again. Druckenmiller pointed out that inflation in the 1970s rebounded after cooling down, and he believes the Fed relies too heavily on economic data, thus making the mistake of cutting rates during strong economic conditions: Whenever inflation cools down, the Fed cuts rates to ensure economic growth, rationalizing rate cuts based on changes in employment reports, but this is the wrong approach. Druckenmiller further stated: The Fed's mission is to avoid repeating the mistakes of the 1970s. Fine-tuning policies and worrying about whether the economy will have a soft landing is not the Fed's job. I believe maximizing long-term employment, rather than just for the next 3-4 months, is the Fed's responsibility. Probability of rate cuts slowing down exceeds 70%. On the other hand, after Trump's election victory, due to the implementation of his administration's policies, inflation may rise again, leading the market to generally predict that the Fed will slow down the pace of rate cuts. According to CME FedWatch data, the market predicts a 64.3% chance that the Fed will cut rates by 1 basis point in December, but there is a 73.2% chance that the benchmark rate will remain above 4.25% to 4.5% in January next year. This means that in the Fed's next two rate decisions, there is over a 70% chance that they will only cut rates by 1 basis point. However, Neel Kashkari, president of the Minneapolis Federal Reserve Bank, stated in an interview with Fox News last weekend that it is too early to discuss the impact of the new government and the new Congress on U.S. interest rates, and that the Fed is focused on the strength of U.S. economic growth: Assuming the current economic growth momentum can be sustained, allowing the U.S. economy to structurally enhance productivity, the Fed may cut rates fewer times than expected in the future. The market predicts the probability of a rate cut in January. Source: CME Fedwatch Related reports: 20 central banks announce interest rate decisions this week! Fed rate cuts coincide with the U.S. elections, will the market face a huge wave? Powell stands firm: Trump won't resign even under pressure, the election won't affect the Fed's interest rate decisions, but is there a change in the December rate cut? JPMorgan warns: Trump's victory = inflation storm resurfaces, the Fed may pause rate cuts in December. "Soros's ally warns: High probability of inflation rebound, the Fed may be too pleased too early" This article was first published in BlockTempo, the most influential blockchain news media.