Inflation is slowing fast enough to allow the Federal Reserve to stop tightening U.S. monetary policy after what is still widely expected to be an interest-rate hike at its meeting in two weeks time, traders bet on Wednesday.

Implied yields on futures tied to the U.S. central bank's policy rate fell after a government report showed consumer prices last month rose 3.0% from a year earlier, after climbing 4.0% in May.

Underlying inflation, whose persistence has been particularly worrying to Fed policymakers, eased more than expected to 4.8%.

The contract pricing still shows traders overwhelmingly expect the policy rate to rise a quarter point, to a 5.25%-5.5% range, at the Fed's July 25-26 meeting, but now see about a 25% chance of another rate hike before year's end, down from about 35% before the report.

(Reporting by Ann Saphir, editing by Christina Fincher)