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Fed officials lean all ways on rate hikes, data in focus

A detail from the front of the United States Federal Reserve Board building is shown in Washington October 28, 2014. REUTERS/Gary Cameron

SAN FRANCISCO (Reuters) - Federal Reserve officials on Thursday were again at public odds over when the U.S. central bank should start raising rates, underscoring the difficult task ahead for Fed Chair Janet Yellen as she tries to build consensus for a rate hike sometime later this year.

Increasingly it appears she may need to play tie-breaker on a committee split over whether the greater risk is in waiting too long to raise rates, or in pulling the trigger too soon.

And the division among Fed officials over whether recent weak U.S. economic data is a temporary setback or a sign of more persistent sluggishness puts a renewed premium on Yellen's read of incoming data in the next two months.

The Fed's June meeting, Yellen said last month, is the earliest date for a start to the Fed's first round of monetary policy tightening in more than a decade.

On Thursday, Vice Chair Stanley Fischer emphasized the determining role of data on the exact timing of a rate hike at some point later this year. But he gave no sense of when he thought that would be.

“We’ll try to do it at the best possible time and we would like to see the economy beginning to grow again,” Fischer said on CNBC.

Three other Fed officials did weigh in on timing, with views as diverse as the locations from which they spoke.

To Atlanta Fed President Dennis Lockhart, the "murky" data argue for waiting.

"I would lean to a little later versus a little earlier," Lockhart said, adding that he expects signs of labor market weakness to prove transitory but wants more evidence to be sure.

"I don't think it is a stark decision where we are risking a lot by going with one date versus another date. So I don't take June off the table, it is just not my preference."

Boston Fed President Eric Rosengren, speaking in London, went further, saying that "even if we wait longer we may not have to raise rates particularly abruptly."

Taken together the remarks add to the impression that the Fed may push its initial rate hike into the fall, an expectation already strong among economists.

But Loretta Mester, president of the Cleveland Fed, said in New York that while the weak first quarter weighs on her forecasts, she prefers rate hikes to start "relatively soon," warning that waiting too long could throw financial markets for a loop.

(Reporting by Howard Schneider in Atlanta, Jonathan Spicer in New York, and William Schomberg in London; Writing by Ann Saphir; Editing by Meredith Mazzilli)