UPDATE 1-Fed rate cut seen on track for June even as inflation bumps up

(Adds details from report in paragraph 2, comment in paragraph 4)

By Ann Saphir

Feb 29 (Reuters) -

An increase in U.S. inflation

last month that was largely in line with expectations likely won't change the calculus for U.S. central bankers weighing when to deliver a first interest-rate cut, traders bet on Thursday.

Federal Reserve policymakers have said they expect the path to their 2% inflation goal to be bumpy. With a lot of progress already in hand they are unlikely to be overly concerned by one month of data that suggests a step back.

The 0.4% January increase in the core personal consumption expenditures price index reported by the Commerce Department's Bureau of Economic Analysis was exactly such a number, more than double the monthly rate needed for smooth progress to the Fed's goal.

Compared with a year ago the rate still ticked down, to 2.8% from 2.9% in December.

"If we get one or two months of the lower inflation, especially on year over year on the core, then maybe a June rate cut could be back on the table," said Peter Cardillo, chief market strategist at Spartan Capital Securities.

After the report traders were pricing in about a 67% chance of a Fed policy rate cut in June versus about 60% before the data, and were betting on two more interest-rate cuts by the end of the year.

That would bring the policy rate to a range of 4.5%-4.75%, down from the current 5.25%-5.5% range where it has been since last July.

Boston Fed President Susan Collins on Wednesday said waiting for all inflation data to point in the same direction before cutting rates would be "too high a bar."

Still, she and her colleagues say they want to see more evidence that inflation is trending downward before changing the policy rate. (Reporting by Ann Saphir with reporting by Khushi Singh; Editing by Toby Chopra and Chizu Nomiyama)