• The Fed may have declared inflation too early, Stanley Druckenmiller said.
• Inflation could hit a low right now, the billionaire investor said in a Norges Bank podcast.
• The Fed is too concerned with achieving a soft landing and should shape policy around the longer-term outlook, he said.

Stanley Druckenmiller isn’t ready to ditch inflation just yet, and says the Federal Reserve shouldn’t either.

“I’m a little concerned that the Fed has declared victory too soon,” the billionaire investor said of consumer prices on a The Norges Bank Podcast. “With credit spreads tight, gold at new highs, stocks rising, no sign of material weakness in the economy — of course, there are some points — that just makes me nervous that this could happen again.”

He’s referring to the Fed’s decision to start cutting interest rates, essentially prioritizing a weakening labor market over inflation it thought was under control. After an initial 50 basis point cut in September, the Fed cut interest rates another 25 basis points this week.

But history should caution against assuming price growth will remain low, Druckenmiller suggested. Consider the 1970sa tumultuous period in which inflation dipped and rebounded, he said.

“It’s back again, and the number of months would match the low at the moment,” Druckenmiller predicted.

In his view, the Fed’s decision to pursue deeper interest rate cuts at a time of economic strength is a mistake caused by the bank’s obsession with data points. When inflation falls, the Fed cuts interest rates to ensure economic growth continues — and it has justified its cuts in light of changing job footprints.

That’s the wrong approach, Druckenmiller said: “To me, the Fed’s job is to avoid the big, big mistakes like the ’70s, like the great financial crisis, like the big inflation that we just had, but all these adjustments fine and concerns about a soft landing that’s not the Fed’s job, in my view, is to maximize jobs over the long term, not for the next three months or the next four months.

The long-term picture may actually be quite different now that Donald Trump is back in the White House.

Although the podcast was recorded before the president-elect’s victory, Druckenmiller noted that Trump’s tariff plans are a little inflationary. Meanwhile, immigration has been a source of non-inflationary growth for the US, he said; it is now at risk under Trump.