US STOCKS-Wall St set for flat open before Fed meeting, inflation tame
* Federal Reserve begins two-day policy meeting
* U.S. consumer prices muted, but rentals rise
* Apple in focus after closing below 200-day moving average
* Futures: S&P up 1.7 pts; Dow up 11 pts; Nasdaq up 10.5 pts
NEW YORK, Sept 17 (Reuters) - Wall Street was set for a flat open on Tuesday before the start of the Federal Reserve's two-day meeting, while inflation data supported the case for the Fed's starting to reduce its stimulus measures.
Investors were hesitant to make big moves before the decision by the policy-making Federal Open Market Committee on whether to scale back its monthly $85 billion in bonds to aid the economy. Many investors expect the Fed will taper purchases a modest $10 billion a month.
The government's economic data on Tuesday showed U.S. consumer prices barely rose in August compared with July as the cost of energy fell, but an increase in rents and medical care costs pointed to a stabilization in underlying inflation that could allow the Federal Reserve to start trimming its bond purchases.
The Consumer Price Index, excluding volatile food and energy rose 1.8 percent, the largest increase since March.
The steady rise in the year-on-year core CPI could ease concerns among some Fed officials about the disinflationary trend becoming entrenched.
The FOMC meeting statement will be released on Wednesday afternoon followed by Fed Chairman Ben Bernanke's news conference.
"We are finally getting to a point where the Fed is to taper or indicate that they are likely to taper. It's been discounted by investors at this point and frankly, I would expect, whatever the decision may be, to leave the market relatively unchanged," Rick Meckler, president of investment firm LibertyView Capital Management in New York.
"Investors will now move from broad economic news that seemed significant in the very quiet summer to specific company news as we enter the key fourth quarter. We will see more interest in company forecasts and economic news like retail sales."
S&P 500 futures edged up 1.7 percent and in line with fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures rose 11 points, while Nasdaq 100 futures rose 10.50 points.
Market sentiment was also pressured by President Barack Obama who warned Republicans in Congress he will not negotiate over an extension of the U.S. debt ceiling as part of a budget fight.
The comments from the president came after former Treasury Sectary Lawrence Summers withdrew as a candidate for Federal Reserve chairman, lifting some market uncertainty about a likely contentious confirmation process. Summers was seen as more prone to wind down stimulus than the new front-runner, Fed Vicewoman Chairwoman Janet Yellen.
In company news, Apple Inc could be in spotlight after the tech giant closed below its 200-day moving average for the first time since August 2012. The stock finished at $450.12, its lowest since July 29. In premarket trade on Tuesday, Apple shares were down 0.7 percent at $446.88.
Pandora Media Inc shares were down 4.3 percent at $22.95 in premarket trade a day after the company warned that its business is slowing and proposed a follow-on offering of 10 million shares for capital expenditures, according to a regulatory filing.
Shares of Aeropostale Inc jumped 13.8 percent to $9.80 in premarket trade after Sycamore Partners reported a 7.96 percent holding in the teen apparel retailer as of Sept. 9.