Famed investor Michael Milken expects the Federal Reserve will transfer slowly on financial coverage — if historical past is any information.

In actual fact, the Milken Institute founder expects the central financial institution will you’ll want to tamp out inflation earlier than beginning to reduce charges in order to keep away from a repeat of the Nineteen Seventies, when inflation ran excessive within the double digits, Milken stated Monday on CNBC’s “Final Name.” He was talking from the Hope World Discussion board in Atlanta.

“Historical past, as you realize, repeats in several methods,” Milken stated. “Within the ’70s, the Fed moved too early. And so sure, we got here out of that ’74, ’75, ’76 interval. However we had large inflation on the finish of the ’70s as soon as once more, with in a single day charges as much as 21%.”

“And so I feel my view proper now could be the Fed might be going to err a bit bit on self-discipline at the moment to see what’s occurred,” Milken added.

Inflation and rates of interest ran excessive within the early Nineteen Seventies earlier than the Federal Reserve dialed again coverage. This stop-and-go strategy in the end didn’t quell rising costs, nevertheless.

Fed Chair Jerome Powell will announce the central financial institution’s newest financial coverage choice Wednesday, when buyers will overview his feedback for indicators into when the central financial institution is anticipating to start out slicing charges.

Within the Nineteen Eighties, Milken was referred to as the king of junk bonds. The financier was an early pioneer of leveraged buyouts and, in 1990, pleaded responsible to securities fraud and tax violations. In 2020, he was pardoned by President Donald Trump.

— CNBC’s Yun Li contributed reporting.

Do not miss these tales from CNBC PRO: