(Updates with PCE)

June 28 (Reuters) -

The U.S.

Federal Reserve

held its benchmark overnight interest rate steady in the

5.25%-5.50% range at the conclusion of its June 11-12 policy

meeting.

U.S. central bank officials 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 (

PCE released June 28

; next release CPI July 11):

The

personal consumption expenditures

price index, used by the Fed to set its 2% inflation

target, eased in May to a 2.6% annual rate, from 2.7% in the

prior month, giving a sense that inflation may be drifting lower

as the central bank hopes.

Core prices, stripped of volatile food and energy costs,

dropped to 2.6% last month from 2.8% in April.

On a month-to-month basis, the PCE index was flat, and

officials have begun to pay closer attention to signs of

weakening demand in the economy as a precursor to a slowed pace

of price increases.

The consumer price index, meanwhile, was flat in May, the

first unchanged month in nearly two years and a further respite

from a surprise jump in prices earlier this year. The headline

CPI rose at a 3.3% annual pace versus 3.4% in April, while the

rate was 3.4% in May after excluding food and energy compared to

3.6% "core" inflation in the prior month.

The lower-than-expected inflation for the month could begin

rebuilding confidence among Fed officials that price pressures

are easing.

EMPLOYMENT (Released June 7; next release July 5):

U.S. firms added a higher-than-expected 272,000 jobs in May,

a solid beat over what economists expected that will likely add

to sentiment among Fed officials that there is no rush to cut

interest rates given the strength of hiring.

The unemployment rate rose slightly to 4%, the highest level

in more than two years. Average job growth in recent months

remains above 240,000.

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.

Neither happened in May. The number of people in a job or

looking for work fell, while average hourly wages rose 4.1%

compared to a year ago. The Fed generally considers wage growth

in the range of 3.0%-3.5% as consistent with its 2% inflation

target.

JOB OPENINGS (Released June 4; next release July 2):

In a sign of the job market's continued return to normal,

the level of job openings declined again in April and pushed the

number of open jobs available for each unemployed person down to

1.24, the lowest level since June of 2021. It is now effectively

back to where it was in the years before the COVID-19 pandemic.

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 the pandemic-era jump to more than 2 to 1 in the

number of open jobs for each available worker was emblematic of

the time.

Things have cooled substantially. 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.