Traders boost bets on Fed rate cuts after producer prices slide

(Reuters) - Traders on Friday priced in a bigger chance that the Federal Reserve will deliver more monetary policy easing this year after a U.S. government report pointed to less inflation in the wholesale pipeline than economists had anticipated. Futures contracts that settle to the Fed's target for the overnight lending rate between banks rose after the data, which showed the producer price index fell 0.1% in December from the prior month. Economists had expected a 0.1% rise. Futures contract prices now point to expectations for rates to fall below 3.75% by year end, versus to a 3.75%-4% range before the data, with a first rate cut likely in March.

(Reporting by Ann Saphir; Editing by Toby Chopra)

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