Fed's Barr open to rate hike if inflation does not moderate

NEW YORK, Sept. 1 (Reuters) - Federal Reserve Governor Michael Barr said on Tuesday that if inflation does not cool quickly, it will be time for the U.S. central bank to increase interest rates.

"Inflation remains too high — and has been for over five years," Barr said in the text of a speech prepared for delivery before the Second Chance Lending Forum.

Flagging the Fed's Sept. 15-16 monetary policy meeting and the space it gives officials to weigh policy choices, Barr said, "If inflation appears not to be moderating sufficiently, then I think we should act decisively to raise rates."

"If trends in the data give me some confidence that inflation is moderating on a path to 2%, then I think we can take a bit more time to assess our policy stance," he added.

Barr also noted that the economy is performing solidly, powered by investment in artificial intelligence technology. He said the job market is "stable, with relatively low unemployment."

Fed Chairman Kevin Warsh nodded last week to the prospect of a rate hike, telling the Kansas City Fed's annual Jackson Hole economic symposium in Wyoming that when it comes to monetary policy, "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do."

Financial markets are betting the Fed will raise its benchmark overnight interest rate, currently set in the 3.50%-3.75% range, by a quarter of a percentage point at its meeting this month. Many Fed officials have signaled an openness to raising rates, citing inflation readings that remain persistently above the 2% target.