WASHINGTON (Reuters) - U.S. inflation rose moderately in March, but that is unlikely to change financial markets' expectations that the Federal Reserve will hold off cutting interest rates until September.

The personal consumption expenditures (PCE) price index increased 0.3% last month, the Commerce Department's Bureau of Economic Analysis said on Friday. Data for February was unrevised to show the PCE price index gaining 0.3% as previously reported.

In the 12 months through March, inflation rose 2.7% after advancing 2.5% in February. Economists polled by Reuters had forecast the PCE price index climbing 0.3% on the month and increasing 2.6% year-on-year. The PCE price index is one of the inflation measures tracked by the U.S. central bank for its 2% target. Monthly inflation readings of 0.2% over time are necessary to bring inflation back to target.

There had been fears that inflation could exceed forecasts in March after the advance gross domestic product (GDP) report for the first quarter on Thursday showed price pressures heating up by the most in a year, driven by surging costs for services, especially transportation, financial services and insurance. These more than offset a drop in the prices of goods.

Most of the resurgence in inflation appears to have been in the first two months of the year.

Fed officials are expected to leave rates unchanged next week. The central bank has kept its benchmark overnight interest rate in the 5.25%-5.50% range since July. It has raised the policy rate by 525 basis points since March 2022.

Financial markets initially expected the first rate cut to come in March, which then got pushed back to June and now to September as data on the labor market and inflation continued to surprise on the upside this year.