MIAMI, Florida (CNN) -- Hurricane Bill weakened Friday afternoon to a Category 2 hurricane when its maximum sustained winds decreased to 110 mph (175 kph), forecasters said.
However, the National Hurricane Center said some fluctuations in intensity are likely through Saturday.
At 2 p.m., the center said the storm was about 290 miles (465 km) south-southwest of Bermuda and 695 miles (1,115 km) southeast of Cape Hatteras, North Carolina.
The hurricane's speed and direction remained the same as it was late morning, moving toward the northwest at 18 mph. A gradual turn to the north-northwest was expected later Friday.
If the storm follows its current track, forecasters said, it should pass over the open water between Bermuda and the U.S. East Coast on Saturday.
Earlier in the day, Bill's outer bands began producing rain in Bermuda as the storm neared the island, the National Hurricane Center said. Forecasters expect Bill to pelt Bermuda with only 1 to 3 inches of rain, although up to 5 inches was possible.
The storm also was beginning to affect the U.S. East Coast, where dangerous rip currents and battering waves were developing, said CNN meteorologist Jacqui Jeras.
Rip currents form as wind and waves push water onto the shore, where it is caught behind an obstacle such as a sandbar until it finally breaks free, sending a strong channel of water flowing away from the shoreline.
There were reports of waves at the center of the storm as high as 54 feet, Jeras said.
The Bermuda Weather Service forecast in advance of Bill that the storm tide would raise water levels by as much as 3 feet along the island and produce large, battering waves. Potentially life-threatening swells were affecting Puerto Rico, Hispaniola and the Bahamas to the south, the hurricane center said.
Bermuda remained under a tropical storm warning and a hurricane watch. The warning means winds of at least 39 mph were expected within 24 hours, while the watch meant winds of at least 74 mph were possible within 36 hours.
Hurricane-force winds extended outward up to 115 miles (185 km) from the center and storm-force winds outward as much as 290 miles (465 km), the center said.
Forecasters advised people along the New England coast and in the Canadian Maritimes to monitor Bill's progress.