"There's no compelling reason to tighten monetary policy," the billionaire said on "Squawk Box." "The Fed's assumptions in terms of how employment rates would lead to inflation were clearly wrong. They don't understand that. What is the problem?"
Dalio believes the Fed won't unwind its $4.5 trillion balance sheet, or portfolio of assets, as quickly as current expectations. The central bank is expected to take nearly 4½ years to get down to around $2.5 trillion.
Reducing the balance sheet is viewed as a slight negative for economic growth, a bit worse for stocks. Overall, however, expectations are for only modestly negative effects.
The Fed began its two-day September meeting Tuesday. When the gathering ends, central bankers are expected to announce the beginning of the unwinding of the balance sheet.
A third rate hike this year is not expected this month, while the market odds for a December increase are about 56 percent, according to the CME FedWatch tool. CNBC's Fed Survey of 42 Wall Streeters found that 76 percent believe the Fed will raise rates in December.