LONDON, May 14 (Reuters) - The dollar edged higher on Tuesday as traders awaited U.S. inflation data, while the yen hovered near a two-week low, stoking intervention worries.

The sterling fell sharply after Bank of England Chief Economist Huw Pill said it was not unreasonable to believe that over summer there might be enough confidence to consider rate cuts.

Traders are awaiting the U.S. consumer price index (CPI), scheduled for Wednesday, to gauge what path the Federal Reserve will take this year in the wake of recent softer-than-expected U.S. labour market data and comments from officials that indicated the central bank was unlikely to raise rates further.

Money markets have dialled back their expectations of Fed rate cuts this year due to sticky inflation and are now pricing in about 40 basis points of easing this year, compared with 150 bps of cuts anticipated at the start of 2024. They are also pricing in a first rate cut, with a 50% chance, only in September, according to the CME FedWatch tool.

Nearly two-thirds of economists polled by Reuters expect the Fed to cut its key interest rate twice this year, starting in September. That's up from a just over half of economists in the previous survey.

U.S. inflation this week is expected to show that core consumer prices rose 0.3% month-on-month in April, down from a 0.4% growth the prior month, according to a Reuters poll.

But before that, U.S. Producer Price Index (PPI) data is due to be released later on Tuesday, which analysts will parse through to get a sense of whether inflation is heading towards the Fed's target of 2%.

"U.S. inflation data for April (is) likely to be the most important data point of the week, especially after the market has reacted sensibly on rather weak U.S. data recently, increasing its rate cut expectations somewhat," said Antje Praefcke, FX analyst at Commerzbank.

In the meantime, the dollar index, which measures the U.S. currency against six rivals, was last 0.17% higher at 105.37. The index has slipped almost 1% in May.

Traders are also closely watching the yen, down to May 1 levels, which then saw suspected interventions by Japanese authorities. It was last 0.14% lower at 156.46 per U.S. dollar.

Japan's Ministry of Finance is suspected to have intervened in the currency market at the end of April through early May after the yen hit a 34-year low of 160.245 on April 29.

But the market remains bearish on the currency given the massive gap between Japan's ultra-low yields and those in other major economies.

Japan's Finance Minister Shunichi Suzuki said on Tuesday the government will closely work with the Bank of Japan on the foreign exchange to ensure there is no friction between their mutual policy objectives.

The yen was briefly supported on Monday when the Bank of Japan sent a hawkish signal by cutting its offer amount for a segment of Japanese government bonds.

In other currencies, the euro eased 0.1% to $1.0777 but is up 1% against the dollar so far this month, while sterling fell 0.37% to $1.2513 after BoE's Chief Hill's remarks on potential summer cuts.

Data showed on Tuesday

British wages

grew by more than expected, but other figures suggested the labour market is losing some of its inflationary heat, keeping the BoE on alert about when to cut interest rates.

(Reporting by Joice Alves in London and Ankur Banerjee in Singapore; Editing by Sonia Cheema)