June 13, 2017 / 3:11 PM / 5 months ago

MONEY MARKETS-Traders see slam dunk on rate hike Wednesday, second one of 2017

NEW YORK, June 13 (Reuters) - U.S. interest rates futures slipped on Tuesday as traders seemed fully prepared for the Federal Reserve to raise interest rates for a second time in 2017 at its upcoming two-day policy meeting that will begin later in the day.

Rates futures prices matched Wall Street’s consensus that U.S. central bank policymakers would raise key overnight borrowing costs by a quarter point to a target range of 1.00-1.25 percent.

The Federal Open Market Committee, the central bank’s policy-setting group, previously raised rates in March, marking only its third hike since ending its near zero rate policy in December 2015.

At 10:29 EDT (1529 GMT), federal funds futures implied traders priced in a 100 percent probability of a rate hike to 1.00-1.25 percent , CME Group’s FedWatch tool showed.

Traders showed less conviction about a third rate hike this year in light of recent signs of inflation softening.

Fed funds futures suggested traders saw about a 29 percent chance of rates rising to 1.25-1.50 percent at the Fed’s Sept. 19-20 meeting and a 57 percent chance of such a move at its Dec. 12-13 meeting .

Reporting by Richard Leong; Editing by Chizu Nomiyama

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