(Reuters) -The Federal Reserve will likely raise its benchmark interest rate later this month to a 5.25%-5.5% range, traders bet on Friday, even as they priced in a slightly lower chance of any further increase after a government report showed hiring slowed more than expected in June.
Traders now see about a 20% chance of a rate hike in September and a 40% chance of one by November, after what is nearly universally expected to be a quarter-point increase at the U.S. central bank's late-July meeting.
Before the Labor Department report, they had seen a nearly even chance that rates would get to a 5.5%-5.75% range by November.
The report, which showed employers hired 209,000 workers last month, is "consistent with steady and gradual slowing of the labor market," wrote III Capital Management's Karim Basta. While that's not enough to dissuade the Fed a July rate hike, he said, an increase in September is "very much an open question."
The Fed held its policy rate steady last month, targeting a 5%-5.25% range, but policymakers signaled further rate hikes ahead given still unacceptably high inflation and its slow progress toward's the Fed's 2% goal amid a strong labor market.