(Updates with CPI and retail sales)

May 15 (Reuters) - The U.S. Federal Reserve held its

benchmark overnight interest rate steady in the 5.25%-5.50%

range at its policy meeting earlier in May.

Policymakers remain uncertain about the timing of a first

rate cut, and say they want to see more data confirming that

inflation will fall, even if slowly.

Among the key statistics they are watching:

INFLATION (CPI released May 15; next release PCE, May 31):

Consumer prices rose more slowly than anticipated in April,

a respite from three months of prices rising faster than

policymakers expected. The headline Consumer Price Index rose at

a 3.4% annual pace versus 3.5% in March, while the rate was 3.6%

in April after excluding food and energy compared to 3.8% "core"

inflation the month before

It won't be enough on its own for Fed officials to

declare they have regained confidence that inflation is on its

way down. But the report did include more encouraging signs,

including a slower-than-anticipated rise in apartment and home

leases that may mean a long-awaited decline in housing inflation

is taking shape.

Investors increased, if slightly, the odds for rate cuts

at the Fed's September and December meetings as a result.

The lower read could have implications for the next

report on the personal consumption expenditures

(PCE) price index

, which the Fed uses to set its inflation target. The PCE

accelerated to a 2.7% annual rate in March, up from 2.5% in the

prior month. Core PCE inflation stripped of volatile food and

energy prices rose 2.8%, matching the rise in February.

RETAIL SALES (

Released May 15

; next release June 18):

Consumer spending flatlined in April, and downward

revisions to earlier data pointed to the sort of slowing demand

Fed officials have said may be needed to finish their inflation

fight.

The unchanged

retail sales

reading for April comes after unexpectedly strong spending

led Fed officials to counsel patience before any rate cuts, and

argue that the full impact of prior rate hikes had not yet had

its full effect on the economy.

EMPLOYMENT (Released May 3; next release June 7):

U.S. firms added 175,000 jobs in April, fewer than expected

and a rare drop below the 183,000 average pace seen before the

pandemic. Average job growth in recent months remains above

240,000, and the unemployment rate in April, at 3.9%, remained

below 4% for the 27th straight month.

But while the figure remains healthy, the decline will be

welcomed by Fed officials as evidence the job market is coming

into better balance, countering a run of recent data that

prompted talk of a reaccelerating economy.

Fed officials have become more comfortable with the idea

that continued strong job growth could still allow inflation to

fall, especially if the supply of labor keeps growing and wage

growth eases. Both did in April: Workforce growth was a modest

87,000. But the annual pace of wage growth fell to 3.9%, the

slowest since June 2021 and edging closer to the 3.0%-3.5% range

that most policymakers view as consistent with the Fed's

inflation target.

JOB OPENINGS (Released May 1, next release June 4)

Fed Chair Jerome Powell has kept a close eye on the U.S.

Labor Department's Job Openings and Labor Turnover Survey

(JOLTS) for information on the imbalance between labor supply

and demand, and particularly on the number of job openings

available to each person who is without a job but looking for

one. The ratio fell in March to 1.32, the lowest level since the

summer of 2021 and nearing the 1.2-to-1 level seen before the

health crisis.

Other aspects of the survey, like the quits rate, also have

edged back to pre-pandemic levels in what Fed officials view as

a balance between supply and demand emerging in the labor market

overall.