Jan 11 (Reuters) - Traders on Thursday pared bets that the Federal Reserve will begin reducing interest rates in March, after a U.S. government report showed inflation was stronger than anticipated in December. Futures contracts that settle to the Fed's target for the overnight lending rate between banks fell after the data, which showed the consumer price index was up 3.4% in the last month of 2023. Futures contract prices now imply about a 60% chance of a March rate cut, versus the 70% chance seen before the data. Traders now expect the policy rate, currently in the 5.25%-5.5% range, to end the year at around 3.92%, rate futures prices show. They earlier had priced in a year-end policy rate of 3.88%
Reporting by Ann Saphir; Editing by Andrew Cawthorne
