(Reuters) - A surge in job growth last month will allow the Federal Reserve to eschew any further big interest-rate reductions and stick to gradual cuts going forward, traders bet on Friday. 

After the Labor Department reported a gain of 254,000 jobs in September and a decline in the unemployment rate to 4.1%, traders of futures that settle to the Fed's policy rate all but abandoned bets that the U.S. central bank will follow its half-point reduction last month with any more like-sized moves.

"The expectation now would be for a Federal Reserve that treads far more cautiously in easing policy," said Karl Schamotta, chief market strategist for Corpay.

Rate futures are now pricing in quarter-point reductions at each of the next Fed meetings through the middle of next year, bringing the policy rate down to around 3.25%-3.5%. The policy rate is currently in the 4.75%-5.0% range.

Prior to the jobs data traders had been pricing in at least one more half-point rate cut before the end of this year.