* Fed meeting in focus for rate hike signals
* Fed seen likely to announce balance sheet reductions
NEW YORK, Sept 18 (Reuters) - U.S. Treasury prices fell on Monday as investors focused on the Federal Reserve's two-day policy meeting this week for signals on whether an additional interest rate hike is likely this year. The U.S. central bank is widely expected to announce at the conclusion of its meeting on Wednesday that it will begin paring its massive portfolio of Treasuries and mortgage-backed securities, with the reductions likely to start this year. Less certain is whether the policy-setting Federal Open Market Committee will raise rates again by the end of the year. Interest rate futures traders are pricing in a 57 percent chance of a hike at the December meeting, according to CME Groups FedWatch Tool. "The key market moving event for this week is the FOMC," said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York. "The debate in the market is whether the Fed will be able to raise rates at the December meeting, given the trajectory of inflation." Treasury yields have jumped since data on Thursday showed that U.S. consumer prices accelerated in August, easing concerns that inflation would disappoint with another weak print. The Consumer Price Index (CPI) rose 0.4 percent last month, the largest rise in seven months. "Last week's CPI number was a step in the right direction. If we maintain this trajectory during the second half of the year, then I think they will be well on their way to hiking in December," Rajappa said. Concerns about North Korean missile tests have also eased, helping yields rise from nine-month lows a little more than a week ago.
Benchmark 10-year notes were last down 6/32 in
price to yield 2.222 percent. The yield fell to 2.016 percent on Sept. 8, the lowest level since Nov. 10.
(Editing by Paul Simao)