Traders pare bets on March start to Fed rate cuts after strong jobs data

(Reuters) – Traders on Friday tempered expectations for the Federal Reserve to start cutting interest rates in March after the U.S. government’s monthly labor market report showed employers added more workers in December than economists had anticipated.

Futures contracts that settle to the Fed’s policy rate indicated traders see only about a 50% chance of a rate reduction in March, versus the nearly 65% chance seen before the stronger-than-expected jobs data.

Traders also pared their view of how far the Fed will cut rates this year, and now expect the policy rate, currently in the 5.25%-5.5% range, to end the year just above 4%. They earlier had priced in a year-end policy rate below 4%.

(Reporting by Ann Saphir; Editing by Hugh Lawson)

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