Michael Milken predicts that the Fed will avoid premature action to prevent a repeat of the 1970s' massive inflation.

If history is any guide, Michael Milken anticipates the Federal Reserve will proceed cautiously with monetary policy.

Milken Institute founder predicts that the central bank will control inflation before reducing interest rates to prevent a repeat of the 1970s, when inflation was in the double digits, according to a statement made Monday on CNBC's "Last Call." He made this prediction from the Hope Global Forum in Atlanta.

Milken stated that history repeats in different forms, citing the example of the Federal Reserve moving too early in the 1970s, which led to a period of massive inflation with overnight rates reaching 21% at the end of the decade.

Milken believes that the Fed will likely adopt a more disciplined approach today to assess the situation.

Despite the Federal Reserve's attempt to control inflation and interest rates in the early 1970s, the stop-and-go approach failed to stop the rise in prices.

On Wednesday, Jerome Powell, the Fed Chair, will reveal the central bank's most recent monetary policy decision, which investors will closely examine for indications of when the central bank intends to begin reducing rates.

In the 1980s, Milken was famed as the king of junk bonds. He was a pioneer of leveraged buyouts and, in 1990, he confessed to securities fraud and tax violations. In 2020, he was granted a pardon by President Donald Trump.

— CNBC’s Yun Li contributed reporting.