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Top Economist Sees Rate Cuts Ahead

The Federal Reserve will cut rates later this year, according to top-rated economist Sung Won Sohn.

Sung, CEO at Hanmi Financial, told CNBC’s “Squawk Box” consumption was healthy in the first quarter, but will slow down in the second half of the year. Capital spending and inventories were weak in the first quarter, but Sung believes those sectors will strengthen in the second half of the year.

“I think economic growth will be just fine, but it’s not going to be a strong as some people expect,” Sung said Thursday. “As bond yields go up, that means economic growth will be slower than you expect. By the end of the year, we might see a slower economy and the bond yields higher. That will contribute to slower economic growth. Perhaps that means the Fed may have to cut the rate.”

Central banks around the world are boosting interest rates. But Sung said central banks are typically a lagging indicator.

“(Fed Reserve Chairman Ben Bernanke’s) primary job is to worry about inflation,” said Sung, named last year by The Wall Street Journal as the most accurate economist in the United States.

“Right now, the economy seems to be doing OK," he said. "Obviously, he’s going to be emphasizing inflation. But once the economy does slow later this year, I think (Bernanke) will change his tune.”