(Reuters) - Federal Reserve Governor Adriana Kugler on Wednesday said she believes inflation will continue to fall this year as households and businesses trim spending and the supply of goods and services continues to improve.

"I expect the disinflationary trend to continue" and help pave the way for rate cuts over the course of the year, Kugler said in comments prepared for delivery at Washington University in St. Louis.

"If disinflation and labor market conditions proceed as I am currently expecting, then some lowering of the policy rate this year would be appropriate," she said, without commenting on the timing or extent of policy easing she expects.

The Fed's policy rate has been at 5.25-to-5.50% since July, and most Fed officials anticipate three quarter-point rate cuts by the end of 2024. They have been reluctant to signal a starting point, though, after progress towards lower inflation seemed to stall at the start of the year.

"January and February showed a bit of firming in the inflation data," Kugler said.

But she also said recent inflation numbers "featured some atypical or seasonal factors that suggest a need to withhold judgment" before deciding that last year's rapid progress back to the Fed's 2% target had indeed slowed.

Rather, Kugler said, she felt there was "still a bit of room" for supply improvements to slow the pace of price increases, "especially in the services sector, where solid labor supply growth will continue to ease wage and inflation pressures."

Demand, meanwhile, should ease.

"I expect consumption growth to slow some this year," she said, with households exhausting the savings buffers built during the coronavirus pandemic and now also facing "restrictive financial conditions."