Traders nudge up bets on Fed rate cuts after inflation data

Aug 29 (Reuters) - Traders of short-term U.S. interest rate futures added slightly to bets the Federal Reserve will start a series of gradual rate cuts next month, after government data showed inflation by the Fed's preferred measure rose 2.6% in July from a year ago.

Fed Chair Jerome Powell said last week that while upside inflation risks remained, downside risks to the job market meant that a policy adjustment may be warranted. Traders on Friday put about a 90% probability on a September Fed rate cut, up from about 85% before the data.