Traders raise the chances of a Fed rate cut following inflation report

Even with inflation running well above the Federal Reserve’s goal, markets became more convinced Wednesday that the central bank will be cutting interest rates by as soon as September.

The annual inflation rate as measured by the consumer price index fell to 4.9% in April, its lowest level in two years but still more than double the Fed’s 2% target.

Still, it was enough for traders to raise the chances of a September rate cut to near 80%, according to the CME Group’s Fed Watch tracker of prices in the fed funds futures market. In fact, the…