There are enough indicators to suggest the economy might need some monetary accommodation, Drunkenmiller pointed out, citing the slowing global trade growth over the past three months and the U.S. financial markets' sell-off, particularly in bank stocks. The billionaire investor had managed George Soros' Quantum Fund and later oversaw $12 billion as president of Duquesne Capital Management.

"The central bank should pause its double-barreled blitz of higher interest rates and tighter liquidity," Drunkenmiller, a former member of the Fed board and now CEO of the Duquesne Family Office, said in the op-ed.

The Federal Reserve should halt its interest rate increases as recent developments in the markets and economy signal caution, hedge fund manager Stanley Drunkenmiller said in a commentary for The the Wall Street Journal over the weekend.

"We believe the U.S. economy can sustain strong performance next year, but it can ill afford a major policy error, either from the Fed or the rest of the administration. Given recent economic and market developments, the Fed should cease—for now—its double-barreled blitz of higher interest rates and tighter liquidity," Drunkenmiller said.

The is down 11 percent and counting from its record high hit earlier in the year as recession fears mount. Bank stocks have led the decline with the financial sector in the S&P 500 down more than 20 percent over that same time span. Other economically sensitive sectors, like housing, transports and industrials, are down by double digits, underperforming the broader markets, Drunkenmiller pointed out in the op-ed.

Markets are now foreseeing a 78 percent chance of a hike when the Federal Reserve meets Wednesday and a 38 percent probability of a move anytime in 2019, according to the CME's tracker. The Fed has forecast three hikes for 2019, but recent dovish comments from Fed officials and a more tempered view of the economy for next year could make them rethink their rate path.

"The Fed should stop this option-limiting exercise entirely. And if data dependence is the Fed's new mantra, it should actually incorporate recent data into its forthcoming policy decision," Drunkenmiller added.

Click here to view The Wall Street Journal op-ed.

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