(Reuters) – Traders on Thursday trimmed bets on interest-rate hikes by the Federal Reserve as a government report showed inflation rose less than expected last month.

Futures contracts that settle to the Fed’s policy rate surged immediately after the report, as traders moved to price in a bigger chance that the Fed will slow the pace of rate hikes next month and likely stop raising rates before the policy rate hits 5%.

(Reporting by Ann Saphir. Editing by Jane Merriman)