(Updates with PCE data)

Aug 30 (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:

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.

EMPLOYMENT (Released Aug. 2; next release Sept. 6):

U.S. firms added an underwhelming 114,000 jobs in July, and

revisions to the prior two months knocked 29,000 positions from

the previously estimated number of payroll jobs. That pushed the

three-month average total payroll growth down to 170,000, below

the level typical before the COVID-19 pandemic.

The unemployment rate also rose to 4.3%, which could

heighten fears that the labor market is deteriorating and

potentially making the economy vulnerable to a recession.

The number of people in a job or looking for work grew.

Government data in late July showed the slowing of the labor

market is being driven by low hiring, rather than layoffs, with

hires dropping to a four-year low in June.

Average hourly wages rose 3.6% in July compared to a year

ago, versus a 3.8% annual increase in June. The Fed generally

considers wage growth in the range of 3.0%-3.5% as consistent

with its 2% inflation target.

JOB OPENINGS (Released July 30; next release Sept. 4):

In a sign of the job market's continued resilience, the

level of job openings remained above 8 million in June, while

the number of open jobs available for each unemployed person

fell slightly to 1.2, remaining roughly where it was in the

years before the pandemic.

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, now down to 2.1, have edged back to

pre-pandemic levels in what Fed officials view as an emerging

balance between the supply and demand for workers. While the

hiring rate has slowed, for example, the layoff rate has

remained stable in a sign that companies are holding on to their

workers.