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NEW YORK (Reuters) - U.S. interest rate futures ended higher on Wednesday as traders scaled back bets on two more rate increases by the end of 2017 following the Federal Reserve's release of its May 2-3 policy meeting minutes.
While the U.S. central bank seemed open to further rate increases, traders appeared less certain on the number of rate hikes for the rest of 2017 given the recent batch of mixed economic data especially softer-than-expected readings in core inflation in March and April, analysts said.
"The bond market doesn't have a lot priced in after June," said Stan Shipley, strategist at Evercore ISI in New York.
Fed policy-makers forecast a rebound in economic activity from an anemic first quarter when U.S. gross domestic product posted its smallest increase in three years.
"Members generally judged that it would be prudent to await additional evidence indicating that a recent slowdown in the pace of economic activity had been transitory before taking another step in removing accommodation," the Fed's latest minutes showed.
Federal funds futures implied traders stuck with a 83 percent chance the Fed would raise rates by a quarter point at its June 13-14 meeting, little changed from Tuesday's close, according to CME Group's FedWatch program.
Fed funds futures suggested traders saw about a 46 percent chance for another rate hike by year-end after June, down from roughly 50 percent late on Tuesday.
Reporting by Richard Leong; Editing by James Dalgleish