Traders see the Fed on hold for now, and a rising chance of a rate hike

April 29 (Reuters) - The Federal Reserve will not cut interest rates this year, traders of short-term U.S. interest-rate futures bet on Wednesday, after the U.S. central bank left short-term borrowing costs on hold for the third straight meeting this year and three policymakers dissented against its "easing bias."

Indeed traders are now pricing in about a 40% chance of a rate hike by April 2027, up from about 20% before the Fed announced its decision, based on aggregated probabilities published by CME Group, where futures that settle to the Fed's policy rate are traded.?

Here is context:

-- The Fed left its policy rate in the 3.50%-3.75% range at its April 28-29 meeting.

-- The decision drew dissents from Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan, who felt the Fed should no longer signal its next step would likely be a rate cut.

-- Earlier Wednesday rate-futures traders all but erased bets on a rate cut this year, and newly added small bets on a rate hike, after oil prices jumped on renewed worries of a prolonged U.S. blockade of Iranian ports. Traders now see additional risk the Fed will turn to rate increases in the first part of next year.

-- Wednesday's meeting is likely Jerome Powell's last as Fed chair. President Donald Trump regularly criticized him for not lowering rates.

-- Trump expects Kevin Warsh, his pick to succeed Powell on May 15, to deliver reductions. Warsh has said he did not promise Trump he would do so.

-- At Wednesday's meeting Trump's only other nominee during his second White House stint, Fed Governor Stephen Miran, dissented in favor of a rate cut, as he has at each meeting since beginning his job in September.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)