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Fed's Powell: Nothing decided on raising rates in September

Federal Reserve Gov. Jerome Powell said Wednesday the labor market continues to look solid, but he's undecided whether interest rates should be raised next month for the first time in nine years.

"First-half growth looks a little stronger now after the first quarter was revised up. Second quarter was reasonably good. The labor market continued to be strong," he told CNBC's "Squawk Box." But, he added, inflation was still "well below" the Fed's targets.

Powell votes on the Fed's policy-setting Federal Open Market Committee (FOMC).

He stressed his decision is data-dependent, but did say he believes the trajectory for rates once the initial hike happens should be shallow. He also said the path for rates is more important than the exact timing of the first move.

Powell's comments came after Atlanta Fed President Dennis Lockhart indicated support for a rate hike next month. In a Wall Street Journal interview published Tuesday, Lockhart, also a FOMC voting member, said the economy appeared ready, unless the data takes a dramatic downturn.

Read More Fed's Lockhart: Sept hike could be 'appropriate'

The debate on Wall Street has focused on whether rates would be increased at the Fed's September meeting or December meeting, both of which feature growth projections and a news conference from central bank chief Janet Yellen.

The Fed has two monthly jobs reports to digest before its September gathering, including Friday's employment data for July. Economists are expecting a July gain of 223,000 nonfarm payrolls and the jobless rate holding steady at 5.3 percent, according to Reuters.

"I believe there is more slack in the economy than 5.3 percent [jobless rate] would suggest," Powell told CNBC Wednesday, ahead the ADP private sector payrolls report, which showed fewer-than-expected jobs created in July.

Read More US private sector adds 185,000 jobs in July: ADP

Policymakers are looking for "some further improvement" in jobs, he said, and "reasonable confidence" of inflation going back to 2 percent in the medium term.

"We've waited and I think been patient. And I think that's the right thing to do. I think the time is coming" for a rate hike, if the data bears outs, he concluded.

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