(Reuters) -The Federal Reserve is likelier than not to deliver a second 50-basis-point interest rate cut in November, traders bet on Friday, after a government report showed U.S. inflation has cooled to a pace nearer to the central bank's 2% goal.

Inflation by the Fed's targeted measure, the year-over-year rise in the personal consumption expenditures price index, was 2.2% in August, the Commerce Department reported.

That's in line with what Fed Chair Jerome Powell said he expected in a news conference after last week's half-point cut. The big start to what's expected to be further reductions in the policy rate ahead was aimed at bolstering what Fed policymakers see as a softening but still-solid labor market.

"If the Fed wants to cut by another 50 basis points in November, the inflation data isn't going to stand in their way," wrote Inflation Insights Omair Sharif after the report. "In fact, the faster inflation cools, the more impetus there is for them to move faster to get to neutral."

Interest rate futures contracts now reflect a 54% chance of a half-point cut in November, versus a still-hefty 46% chance of a quarter-point cut.

Either way traders are betting the policy rate - now in the 4.75%-5.00% range - will be 75 bps lower by year end, and in the 3.00%-3.25% range by mid-2025. That's just above what most Fed policymakers see as the neutral rate where the level of borrowing costs is neither stimulating nor braking a healthy economy.