Market strains warrant caution on rate hikes: Fed's George

WASHINGTON (Reuters) - A Federal Reserve policymaker who has argued for a near-term U.S. interest rate hike said central bankers should take a "wait-and-see" approach to tightening policy due to a financial market sell-off and China's economic slowdown.

The comments by Kansas City Fed Bank President Esther George, aired on Thursday in a cable television interview, were a sign that concerns over financial market turmoil have penetrated deeply into the U.S. central bank, further reducing the likelihood of a Fed rate hike in September.

George's expressed caution followed comments made Wednesday by the head of the New York Fed that the case for a September rate lift-off now seemed "less compelling." The chief of the Atlanta Fed on Monday also appeared more cautious about raising rates next month.

"Given what we've seen recently, I think we just have to wait and see," George told Fox Business Network.

In an interview on CNBC network, George said "this week's events complicate the rate picture."

While softening her stance, George made clear she was not ruling out the possibility she would support a rate increase as early as September. "I don’t want to take too much signal from something that could turn out to be noise. I don’t want to overreact to short-term data that may not in the long term really turn out to be significant for that kind of decision," she told Fox Business News.

(Reporting by Timothy Ahmann; Editing by Chizu Nomiyama and Andrea Ricci)