June 18 (Reuters) - The U.S. central bank should only start to cut interest rates after "months, and more likely quarters" of falling inflation, moderating demand and expanding supply, St. Louis Federal Reserve President Alberto Musalem said on Tuesday, in his first public comments on monetary policy since becoming head of the regional Fed bank.

"I will need to observe a period of favorable inflation, moderating demand and expanding supply before becoming confident that a reduction in the target range for the federal funds rate is appropriate. These conditions could take months, and more likely quarters to play out," Musalem said in prepared remarks for an event in St. Louis.

The Fed held its benchmark lending rate in the 5.25-5.50% range, unchanged for the past 11 months, at its policy meeting last week as it seeks to keep pressure on the economy to cool inflation back to its 2% target rate.

Since that meeting, policymakers have so far lined up to consolidate the view they are content to keep rates steady until the economy sends a clearer signal - through either a sustained decline in the rate of price increases or a jump in the unemployment rate.

In a wide-ranging speech, Musalem also did not rule out additional rate hikes should inflation become stuck "meaningfully" above 2% or reaccelerates, although he emphasized that was not his base case.

Musalem, who has a PhD in economics with market, public policy and central bank experience, rotates into becoming a voting member on the central bank's rate-setting Federal Open Market Committee next year. He took up his post in April.

The St. Louis Fed chief said he expects consumption to moderate in the coming quarters and noted that based on data released so far this month, he expects a "welcome downshift" in the personal consumption expenditures price index for May.

Retail sales data earlier on Tuesday provided a further indication that consumers are pulling back on spending and prioritizing essentials.

But Musalem indicated he remains uncertain if the current monetary policy stance is as restrictive as it needs to be.

"I believe that monetary policy is continuing to exert downward pressure on aggregate demand and inflation. I also perceive some uncertainty about the degree of restrictiveness," he said, noting that financial conditions "feel accommodative for some parts of the economy while restrictive for others." (Reporting by Lindsay Dunsmuir; Editing by Paul Simao)