July 12 Reuters  Inflation is slowing rapidly enough to allow the Federal Reserve to stop tightening U.S. monetary policy after what is still widely expected to be an interestrate hike at its meeting in two weeks39; time, traders bet on Wednesday.

Implied yields on futures tied to the U.S. central bank39;s policy rate fell after a Labor Department report showed consumer prices last month rose 3.0 from a year earlier, a big step down from its 4.0 pace in May.

Underlying inflation, whose persistence has been particularly worrying to Fed policymakers, eased more than expected to 4.8.

With that core inflation figure still more than twice the Fed39;s 2 target, traders continue to overwhelmingly expect policymakers to increase the benchmark rate a quarter point, to a 5.255.5 range, at their July 2526 meeting.

But they now see little more than a oneinfour chance of another rate hike before year39;s end, down from a more than oneinthree chance seen before the report, futures prices show.

Clearly inflation is heading in the right direction, and this is showing that they39;ve made significant progress in their battle to tamp it down, said Art Hogan, chief market strategist at B Riley Wealth in Boston. Even if they raise rates at the end of this month, that may likely be the last time.

Reporting by Ann Saphir with reporting by Shashwat Chauhan, Lucia Mutikani, editing by Christina Fincher and Chizu Nomiyama

Source Reuters