NEW YORK (Reuters) - Federal Reserve Bank of Cleveland President Loretta Mester said on Tuesday she continues to think the central bank is on track to cut rates this year but still needs to see the data confirm such a move is possible.

"If the economy evolves as expected, then in my view it will be appropriate for the [Federal Open Market Committee] to begin reducing the fed funds rate later this year, as inflation continues on its downward path toward 2%, and labor markets and economic growth remain solid," Mester said in the text of a speech prepared for delivery before a gathering held by the National Association for Business Economics, Cleveland Association for Business Economics, and Team NEO.

As for the pace of that action, "if the economy evolves as I expect, I anticipate that we will be able to move rates down gradually," she said.

Mester cautioned that to pave the way for an easing in the stance of monetary policy she needs to see upcoming inflation data meet her forecast of further declines. Because that could take some time, "I do not expect I will have enough information by the time of the FOMC's next meeting to make that determination" of an easing in rates.

The next Fed policy meeting is scheduled for April 30 and May 1. Officials at the last FOMC meeting in March maintained their overnight target rate range at between 5.25% and 5.5% and continued to pencil in three rate cuts this year. Strength in inflation data at the start of the year has called into question when the Fed will kick off rate cuts and how far it will be able to go.

Mester, who will retire in June, is currently a voting member of the FOMC.

In her speech Mester said monetary policy is in a good place right now because a strong economy gives the central bank room to take in data before making a change in rates. She expects continued declines in inflation albeit at a slower pace than last year. She also cautioned against premature rate cuts.

"Moving rates down too soon or too quickly without sufficient evidence to give us confidence that inflation is on a sustainable and timely path back to 2% would risk undoing the progress we have made on inflation," Mester said, adding "at this point, I think the bigger risk would be to begin reducing the funds rate too early."

Mester also said in her remarks that she'd revised up her expectation for growth this year to just above 2%, and she said the job market will likely see higher unemployment rates. Mester said she also revised at the FOMC meeting her view of the longer-run federal funds rate to 3% from her prior estimate of 2.5%.