(Reuters) – After a government report showed U.S. consumer prices unexpectedly rose last month, traders pared earlier bets the Federal Reserve could start interest-rate cuts as soon as March, and now are pricing the Fed’s May meeting as the likeliest start for interest-rate reductions.
Futures contracts tied to the Fed policy rate now reflect about a 40% chance the U.S. central bank will lower the policy rate to a range of 5%-5.25% in March, compared to close to a 50% chance seen before the report. Traders continue to bet on about four rate cuts next year as the Fed reduces borrowing costs in line with what’s expected to be cooling inflation.
(Reporting by Ann Saphir; Editing by Chizu Nomiyama)
