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INTERVIEW-Fed's Mester says US rate hikes should continue despite weak inflation

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NEW YORK, Aug 16 (Reuters) - Cleveland Federal Reserve Bank President Loretta Mester said the recent weakness in U.S. inflation has not convinced her the Fed should delay plans for further interest rate hikes in an economy she feels remains on track for steady growth and rising wages.

"I am not there yet. I still think we need to start bringing back some of the accommodation," by raising rates and pressing forward with plans to reduce the size of the Fed's asset holdings, Mester said in an interview with Reuters.

Risks to the Fed's current median forecast of one more rate hike this year "are balanced" as businesses weigh an improving global economy against uncertainty over the policies of President Donald Trump's administration.

"We have to be cognizant of the fact that the Fed has to move before we get to both of our goals... I'm not one who would like to see inflation be at 2 percent before we continue on the path," of higher rates, she said.

On a day when two of the Trump administration's high-level business panels collapsed over the president's comments about weekend violence in Charlottesville, Mester said she did not see the uncertainty surrounding the administration yet feeding through to the economic growth outlook.

Among business contacts in her Cleveland district, "there has been a little softening of sentiment and that is one of the things we have to watch for -- whether that uncertainty is going to feed through," she said. "At this point it does not look like it." (Reporting by Howard Schneider and Jonathan Spicer; Editing by Chizu Nomiyama)