US rate futures lift June Fed cut bets after soft inflation print

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 13 (Reuters) - U.S. interest rate futures on Friday raised odds of rate cuts by the Federal Reserve in ?June after a report that showed ?inflation rose less than expected in January.

Futures on the federal ?funds rate, which measure the cost of unsecured ?overnight loans between banks, priced in ?a nearly 70% ?chance that the Fed will resume cutting interest rates at ?the June meeting. That was ?64% before the data's release.

The U.S. central bank, however, is still expected to ?hold interest rates steady ?at the ?March meeting.

Fed funds futures?also implied 64 basis points (bps) of easing by the central bank after the ?data, compared with 58 bps just before.

Data ?showed the Consumer Price Index (CPI) rose 0.2% last month after an unrevised 0.3% gain in December. Economists polled by Reuters had forecast the CPI ?increasing ?0.3%.

Excluding the volatile food and energy ?components, the CPI increased 0.3% after rising by an ?unrevised 0.2% in December.

"As long as CPI remains in check - which so far it has - then the rates discussion will revert back to the labor market, and under the current economic conditions the Fed is likely ?to proceed cautiously lowering rates a couple of times later this year," said Chris Zaccarelli, chief ?investment officer for Northlight ?Asset Management in Charlotte, North Carolina.

(Reporting ?by Gertrude Chavez-Dreyfuss)