Traders of futures tied to the Federal Reserve's policy rate kept bets on Friday that the U.S. central bank will raise interest rates just once more beyond next week's widely expected quarter-point hike before stopping, after a government report showed inflation easing as expected last month.

Fed funds futures pared earlier losses to be mostly flat on the day, after the Commerce Department reported the Fed's preferred gauge for inflation, the personal consumption expenditures (PCE) price index, rose 0.1% last month after a similar rise in November.

The pricing implies near certainty that the Fed will raise rates a quarter of a percent at its next meeting on Jan. 31-Feb. 1, and about an 85% probability of one more quarter-point rise in March. Prices also reflect about a one-in-three chance of a further quarter-point increase by June.

The current target range is 4.25%-4.5%.

(Reporting by Ann Saphir Editing by Raissa Kasolowsky)