Fed seen cutting policy rate by 25 bps next week

US central bankers will likely start a series of interest-rate cuts next week with a quarter-of-a-percentage point reduction, traders bet on Wednesday, as government data showed inflation cooled in August from a year earlier, but a measure of underlying inflation remained sticky.

Traders now see just a 15 per cent chance of a bigger half-point rate cut at the Fed's Sept 17-18 policysetting meeting, down from about 29 per cent before the report, after government data showed the consumer price index rose 2.5 per cent from a year earlier, but excluding volatile food and energy prices it was up 3.2 per cent.