(Reuters) - The Federal Reserve will wait until September before starting to cut interest rates, traders bet on Wednesday, after a government report showed inflation was stronger than expected last month for a third month in a row.    U.S. short-term interest-rate futures plunged after the report, which showed the core consumer price index rose 0.4% in March from February and was up 3.8% from a year earlier.

The Fed targets 2% inflation, and traders bet the latest reading is too hot for central bankers to cut in June, as they had been expecting before the report, or even by the Fed's late-July meeting. Traders are also betting the Fed will only cut rates twice this year, less than the three cuts they had been pricing in before and which Fed policymakers had signaled likely in March.