Interest rate traders are increasing their bets that the Fed could be forced to raise interest rates next year, well before policymakers hinted, as the surge in US consumer price data released on Wednesday intensified the debate about how hot inflation might be.

Euro-dollar futures contracts currently digest the probability of raising interest rates by 25 basis points by the end of 2022 of more than 80%, up from 67% at the beginning of the week. This is a full year earlier than policy makers have hinted. At the same time, voices from William Dudley, the former president of the New York Fed, and others are getting louder and louder. He said the central bank not only needs to raise interest rates, but it should also be much higher than investors expected.

After the month-on-month inflation reading hit its highest level since 2009, Treasury yields and market-based expectations also rose, but to a relatively limited extent.It shows that traders do not think inflation will get out of control in the short term. The bond market broke away from its New York trading peak after five years of break-even inflation, while euro-dollar futures traded back to levels last seen at the beginning of the week.

"concerns about inflation are not unfounded," BNP Paribas said."inflation and break-even inflation should continue to rise," said Shahid Ladha, head of interest rate strategy for the Americas of the Group of 10. But in the second half of the year, the rate of price rise may gradually slow down. "