Atlanta Federal Reserve President Raphael Bostic said he expects the Fed's first interest rate cut, scheduled for the third quarter, to be followed by a pause at the next meeting to assess how the shift in monetary policy is affecting the economy.

Bostic, in remarks posted on the Atlanta Fed’s website on Monday, said he was concerned that businesses had a lot of pent-up glut and could unleash a wave of new demand after a rate cut that would add to price pressures. That could be another reason not to cut rates at a rapid pace, he told reporters at a news conference.

Bostic's comments come ahead of Federal Reserve Chairman Jerome Powell's testimony before Congress on Wednesday and Thursday. The chairman is expected to reiterate the policy committee's message that there is no rush to cut interest rates.

The U.S. central bank chief and nearly all of his colleagues have said in recent weeks that they will be patient in deciding when to cut interest rates given the underlying strength of the U.S. economy and higher-than-expected inflation in January.

The Federal Open Market Committee voted unanimously to leave interest rates unchanged in a range of 5.25% to 5.5% in January, and investors are now betting that the central bank will start easing in June, according to futures markets. The committee will update its interest rate forecasts at its next meeting on March 19-20.

Bostic warned that companies increasing spending and investment could add to inflationary pressures, and that could happen at the first sign of a rate cut.

He added: This threat, which I will call pent-up exuberance, is a new risk that I think deserves scrutiny in the coming months.

Bostic reiterated in his comment that he had hoped the central bank could bring inflation down to its 2% target without a recession, which would be a resounding success by historical standards.

Bostic said he still believes it would likely be appropriate for the Fed to agree to two quarter-point rate cuts by the end of this year.

Before cutting rates, I need to see more progress to feel fully confident that inflation is on track to average 2% over time, according to Bostic.

Bostic said he believes inflation is in line with slowly returning to the Fed's target without doing much harm to the labor market or growth, which he called a resounding success.

But he said that outcome was not guaranteed... and it was too early to declare victory in the battle against inflation.