JACKSON HOLE, Wyoming (Reuters) - Federal Reserve policymakers on Thursday said that with inflation well down from its highs they are paying close attention to the U.S. labor market to gauge when to begin reducing interest rates, with one saying they should move "soon."
"I do think that soon it is appropriate to begin easing," Boston Fed President Susan Collins said on Thursday, signaling her likely support for a rate cut at the U.S. central bank's policy meeting next month.
Collins, in an interview with Fox Business on the sidelines of the annual global central banker economic symposium in Jackson Hole, Wyoming, said that inflation has eased "quite a lot." The Fed targets 2% annual inflation by the personal consumption expenditures price index; by that gauge inflation was 2.5% in July.
With labor markets healthy overall and the preservation of that health a priority, Collins said, "I think a gradual, methodical pace (of interest rate cuts) once we are in a different policy stance is likely to be appropriate."
Her view contrasts with Kansas City Fed Bank President Jeff Schmid, one of the U.S. central bank's more hawkish policymakers.
"We've got some data sets to come in before September," Schmid said in an interview with broadcaster CNBC, referring to the Fed's policy meeting on Sept. 17-18. "There is some room to consider where we go from here but I frankly think we've got time."
Still, he added, "it bears looking harder" at the recent rise in the unemployment rate, which measured 4.3% in July "I'm going to let the data show where we lead...I would agree with several of my colleagues that you probably want to act maybe before (inflation) gets to two (percent) but that sustainability to two I think is really important."
The U.S. central bank is widely expected to begin reducing its benchmark policy rate at its upcoming meeting, with most Fed officials buoyed by encouraging inflation data and increasingly anxious about the health of the job market.
(Reporting by Lindsay Dunsmuir and Ann Saphir; Editing by Chizu Nomiyama)