(Reuters) -The U.S. central bank held its benchmark overnight interest rate steady in the 5.25%-5.50% range at the conclusion of its July 30-31 policy meeting, but since then Federal Reserve Chair Jerome Powell has declared "the time has come for policy to adjust," signaling that rate cuts are likely to begin at the Sept. 17-18 meeting.

Just what size of a reduction - 25 basis points or 50 - will hinge on data between now and then.

Among the key statistics the U.S. central bank is watching:

EMPLOYMENT (Released Sept. 6; next release Oct. 4):

U.S. firms added a weaker-than-expected 142,000 jobs in August, and revisions to the prior two months knocked 86,000 positions from the previously estimated number of payroll jobs. That pushed the three-month average total payroll growth down to 116,000, well below the level typical before the COVID-19 pandemic, adding further evidence that the economy is slowing.

The unemployment rate, however, edged down to 4.2%, which could allay some fears that the labor market is deteriorating rapidly or that the economy is on the cusp of recession.

Average hourly wages also rose 3.8% in August compared to a year ago, versus a 3.6% annual increase in July, which could provide a wrinkle to the Fed's deliberations later this month as officials are still anxious to make sure inflation is fully tamed. The U.S. central bank generally considers wage growth in the range of 3.0%-3.5% as consistent with its 2% inflation target.

In the immediate aftermath of the jobs report, traders briefly boosted bets for a 50-basis-point cut at the Fed's next meeting to roughly even odds. The odds of such a move were last at about 35%.

JOB OPENINGS (Released Sept. 4; next release Oct. 1):

Most Fed officials in the last couple of months have turned their primary attention from inflation to the job market, which this summer began exhibiting clear signs of weakening.

That shift in focus was further validated by data showing job openings in July were the lowest in more than three years, according to the U.S. Labor Department's Job Openings and Labor Turnover Survey (JOLTS). Moreover, the ratio of vacant jobs to each unemployed person fell to 1.1-to-1 and is now lower than its average in the 12 months preceding the COVID-19 pandemic.

Fed officials may also voice concern about the rise in layoffs reflected in the report. The recent rise in the unemployment rate had largely been seen as a result of an increase in the size of the workforce, with outright job cuts remaining low until now. The JOLTS data showed layoffs totaled 1.76 million in July, the most since March 2023.

INFLATION (PCE released Aug. 30; CPI released Aug. 14; CPI release Sept. 11):

The personal consumption expenditures price index the Fed uses to set its 2% inflation target came in slightly softer than forecast in July, with an annual increase of 2.5%, the same as in June. The core index excluding food and energy costs was also slightly lower than forecast at 2.6%, also unchanged from the month before.

But it is the month-on-month rates starting in April that underpin Fed officials' growing confidence that inflation is on its way back to the target in a sustainable fashion, allowing them to turn their focus to protecting the job market.

The headline monthly rate in July was 0.2%, as was the core rate. Since April, when readings softened after a bump up in the first quarter of the year, the unrounded headline rate has averaged 0.12% and the core has averaged 0.17%, both of which annualize essentially to rates at or just below the Fed's target.

"With inflation on track to moderate back to the 2% target, the Fed is more free to focus on the health of the economy," Michael Pearce, deputy chief U.S. economist at Oxford Economics, wrote in a note.