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NEW YORK, April 7 (Reuters) - U.S. interest rates futures were flat to lower early Friday afternoon, erasing their earlier gains, as New York Federal Reserve President William Dudley reduced bets that a possible reduction in the central bank's balance sheet would produce a protracted pause in its rate-hike campaign.
Federal funds futures implied traders saw a 66 percent chance the Fed would raise rates at its June 13-14 policy meeting, compared with 71 percent late on Thursday, CME Group's FedWatch tool showed. They had fallen below 60 percent earlier Friday following a government report that showed a much weaker-than-forecast reading on payroll growth in March. (Reporting by Richard Leong; Editing by Jonathan Oatis)