WASHINGTON: The current strength of the US economy means the Federal Reserve should cut interest rates just once this year, and not until the final quarter, a senior bank official said Wednesday.

Atlanta Fed President Raphael Bostic, who is a voting member of the Fed’s rate-setting committee this year, told CNBC he now thinks the Fed should make just one cut this year – below the three that were predicted by Fed officials in March.

“I’ve gone back to where I was before, because we’ve seen inflation kind of become much more bumpy in its trajectory,” he said.

US Fed official predicts higher long-term interest rates

Bostic has been on a journey about the timing of cuts in recent months, moving from expressing reservations about early cuts to voicing cautious support for starting them by summer.

But the first few months of the year have seen an uptick in inflation, while both the economy and the labor market have shown signs of resilience.

Bostic said the data “says to me that we’re just going to have to watch and wait and see how things evolve.”

If the economy continues to develop as expected, Bostic said it would be “appropriate” for the Fed to start cutting rates in the final quarter of this year.

“My outlook right now is that inflation is just really just going to drop incrementally through the course of 2024,” he said, adding he did not expect the Fed to hit its long-term target of two percent before early 2026.

“I think we have time to be patient, and we can just watch the economy and see if that’s how things actually play out,” he said.

Bostic’s comments came shortly before Fed chair Jerome Powell was scheduled to discuss the US economic outlook at a conference in Stanford, California.