Feb 14 (Reuters) - Traders of futures tied to the Federal Reserve's policy rate stuck to bets on Tuesday that the U.S. central bank will raise interest rates at least twice more after inflation was reported to have accelerated in January, but notched its smallest annual increase in more than a year.
Fed funds futures swung lower, then higher, and then back again after the Labor Department reported the consumer price index rose 6.4% last month from a year earlier, far above the Fed's 2% target but a step down from last year's blistering pace.
The futures contracts pricing shows traders are betting heavily that the Fed will raise rates a quarter of a percent at its meetings in March and in May, and see about an even chance of a further increase in June or July.
The current target range is 4.5%-4.75%.
