March 13 (Reuters) - The Federal Reserve will probably next cut interest rates in September, traders bet on Friday after government data showed inflation by the Fed's targeted measure wasn't quite as hot as feared at the start of the year.

Before the data, which showed a 2.8% year-on-year rise in the personal consumption expenditures price index in January, the betting had been for a first Fed rate cut in October. The Fed targets 2% inflation.

In the two weeks since the Iran conflict set off a surge in oil prices, traders had pushed bets on a first Fed rate cut to as late as December. Oil prices for now remain key to expectations around the Fed, which is universally expected to leave rates on hold when central bankers meet in Washington next week.

"Inflation remains elevated, sticky and with the possibility of energy prices eventually moving into the pipeline, the Fed is likely to stay on hold for a longer period of time," said Spartan Capital Securities chief market economist Peter Cardillo.