(Reuters) -The Federal Reserve will likely be able to start cutting short-term borrowing costs by September, traders continued to bet on Tuesday, after a government report showed a widely expected increase in consumer prices last month. 

The market-priced probability of a Fed interest-rate cut by September remained around 60% after the Bureau of Labor Statistics reported that the consumer price index rose 2.7% in June from a year earlier, and underlying inflation was up 2.9%.

Traders continue to see just a 5% chance of a rate cut this month, with Fed policymakers mostly saying they want to see more data before reducing rates.