Fed seen near certain to switch to smaller rate hikes as inflation slows

Fed seen delivering quarter-point hike next month as inflation slows

(Reuters) – Traders of futures tied to the Federal Reserves policy rate added to bets on Thursday that the U.S. central bank would further slow its pace of rate hikes at its next meeting after a government report showed inflation easing last month.

Fed funds futures rose after the U.S. Labor Department reported consumer prices fell last month, reflecting close to an 85% probability that the Fed will raise rates just a quarter of a percent at its next meeting on Jan. 31-Feb. 1, versus just 15% for another half-point hike.

Traders also increased bets on the Fed ultimately stopping rate hikes with the policy rate at just short of 5%, in June. The current target range is 4.25%-4.5%.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

AUDUSD Forecast – Bullish Traders Betting US CPI Data Confirms Cooling InflationXRP Bulls Look for a Path to $0.40 on Pending SEC v Ripple RulingsNatural Gas, WTI Oil, Brent Oil – Oil Markets Rally After EIA ReportNASDAQ, S&P 500, Dow Jones – Stocks Gain Ground Ahead Of CPI ReportCrypto Market Daily Highlights – XRP Leads the Top Ten BreakoutETH Eyes $1,450 to Bring $1,500 into View on FTX News and US Inflation