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Fed's Fischer: Economy is stronger, next jobs report a key for hike decision

Federal Reserve Vice Chairman Stanley Fischer told CNBC on Friday the decision on whether to hike interest rates should be looking forward, not backward — and the next jobs report will figure into the process.

The U.S. economy has strengthened, with strong jobs data in the last three months, Fischer told "Squawk Alley" in an interview a week before the government releases the August employment report.

"That will probably weigh in our decision, along with other data that may come in," he said.

"The problem with this economy is there is so many numbers each day," Fischer said. "You have to try and figure out what is the main thrust of what's going on in the economy."

"You can always find a set of data that will enable you to build a different case," he continued. "That's the hard part."

The interview followed Fed Chair Janet Yellen's speech at the Kansas City Fed's Jackson Hole Economic Symposium earlier Friday. Yellen said the case for increasing rates for the second time in a decade has strengthened in recent months.

Referring to Yellen's remarks, Fischer said the big numbers Fed policymakers consider are looking better. "We're reasonably close to what is thought of as full employment. [The] inflation rate this year is higher than last year's. It's still not up to 2 percent. But it's been growing."

Fischer also addressed one of the problems in the economy — productivity growth. "We haven't seen much [positive] change. In fact, we've seen it going the other way.

The Federal Open Market Committee meets Sept. 20-21 to consider an interest rate increase.

The number of hikes this year depends on the data, Fischer said, reiterating the Fed's standard line. But he did say Yellen's comments were consistent with the possibility of as many as two rate hikes this year.

Going into 2016, before the meltdown in the markets, the Fed was forecasting as many as four rate increases this year. Even with as little as one move expected now, Fischer argued policymakers are not behind the curve.

Action in Washington on the fiscal side would help economic growth, he added.

With the 2016 presidential race heating up, Fischer said the Fed is going to stick to its purview. "We going to look at economic signals. We're not going to be political forecasters."

Once the election happens, if the result were to impact the economy, the Fed would then consider such implications, not before, he insisted.

Before Yellen's address, two other voting members of the central bank's policymaking committee offered their thoughts on the rates and the economy.

St. Louis Fed President James Bullard told CNBC's "Squawk Box" that next month might be a good time to raise rates. But he refused to give a firm timetable.

Cleveland Fed President Loretta Mester, who favors a gradual rate raise, said later on the program the central bank's Sept. 20-21 meeting is "live," meaning a move could happen.

The possibility of a December hike, around 50 percent before Yellen's remarks, moved up to 53.5 percent, according to the CME. However, the market continues to doubt any action in September, which has just an 18 percent chance.