Fed’s path to more tightening a little less sure after inflation data

(Reuters) – The Federal Reserve is seen slightly less locked in to a July interest rate hike, traders bet on Friday, after a government report showed price pressures eased slightly in May but remained far above the Fed’s goal.

Inflation by the Fed’s preferred personal consumption expenditures index rose last month at a year-on-year pace of 3.8%, data Friday showed, easing from April’s 4.4% pace. Underlying core inflation rose 4.6%, a touch less than the 4.7% economists expected. Futures tied to the Fed’s policy rate, which had before the data priced in a nearly 90% chance of a July Fed rate increase, now reflect about an 85% probability.

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