By Ben Leubsdorf 

JACKSON HOLE, Wyo.--The Federal Reserve's No. 2 official said there is "good reason" to think sluggish U.S. inflation will firm and move back toward the U.S. central bank's 2% annual target, touching on a significant assessment facing the Fed ahead of its September policy meeting.

"Given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further," Fed Vice Chairman Stanley Fischer said Saturday in remarks prepared for delivery at the Federal Reserve Bank of Kansas City's annual economic symposium.

In its last policy statement, the Fed said its first interest-rate increase will come after "some further improvement in the labor market" and when officials are "reasonably confident" inflation will move back to the central bank's 2% annual target.

Mr. Fischer, in his Saturday remarks, didn't declare whether those conditions had been fulfilled. He said the Fed awaits the Labor Department's August jobs report, due out Sept. 4. On inflation, "with regard to our degree of confidence in this expectation, we will need to consider all the available information and assess its implications for the economic outlook before coming to a judgment," he said.

On Friday, Mr. Fischer told CNBC that "it's early to tell" what the Fed will do at its Sept. 16-17 policy meeting. Some policy makers in recent days have signaled support for beginning to raise short-term interest rates that have been pinned near zero since December 2008, while others have said recent financial-market volatility and worries about China's economy could justify delaying the long-awaited liftoff.

Mr. Fischer said Saturday that Fed officials at the moment "are following developments in the Chinese economy and their actual and potential effects on other economies even more closely than usual."

In his remarks, Mr. Fischer discussed various forces that he said have restrained U.S. inflation, including declines in energy prices, softness in non-oil commodity prices, a strengthening of the dollar and "ongoing economic slack."

Despite improvement in the labor market, "we have seen no clear evidence of core inflation moving higher over the past few years," Mr. Fischer said. "This fact helps drive home an important point: While much evidence points to at least some ongoing role for slack in helping to explain movements in inflation, this influence is typically estimated to be modest in magnitude, and can easily be masked by other factors."

Write to Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

August 29, 2015 12:40 ET (16:40 GMT)