Traders are betting Federal Reserve Chair Jerome Powell’s tough inflation talk means the central bank will step on the gas to drive up interest rates even faster than expected just last week.

In the fed funds future markets, odds are rising that the Federal Reserve will become more aggressive and raise interest rates by 50 basis points — or a half-percent — at each of its next two meetings. According to the CME FedWatch Tool, the probability is better than 70% that the Fed reaches 2.25% by the end of the year.

Powell surprised the market when he spoke at the National Association for Business Economics on Monday. He said that “inflation is much too high,” adding that the central bank “will take the necessary steps to ensure a return to price stability.” Fed funds futures for May and June have moved higher, as they did across the rest of the year and into 2023.

Ralph Axel, a rates strategist at Bank of America, said there are now 1.184 basis points or 4.7 additional quarter-point rate hikes priced into fed funds futures by July. “There’s a 73% chance of a 50 in May, and a 63% chance of a 50 in June,” he said. The July futures are priced for a quarter-point move.

The market is pricing in more rate hikes than the Fed presented in its own forecast last week. The central bank raised rates by a quarter-point last Wednesday and released its forecast for six more 25-basis-point rate hikes by the end of the year. A basis point is equal to 0.01%.

Powell said Monday that the Fed would be tough on inflation. He said that, if necessary, he supported an even faster pace of interest rate increases, with the possibility for rate hikes that are larger than 25 basis points.”

The Fed chief acknowledged that central bank officials and many economists “widely underestimated” how long inflationary pressures from Covid would last. He said those pressures were made worse by the war in Ukraine, which has driven the price of oil and other commodities sharply higher.

“Powell basically came out and hammered that point home. We’re under a single mandate now, at least until further notice,” said Blake Gwinn, head of U.S. rates strategy at RBC. “It’s all about inflation right now. They basically expressed a large willingness to overlook any kind of growth data, employment data while they’re battling inflation.”

Goldman Sachs economists late Monday boosted their forecast to include half-point hikes in both May and June and four more quarter-point hikes for the rest of the year.

The market now expects the Fed to reach a high end rate, or terminal rate, before it stops the tightening cycle. According to the futures market, the fed funds rate is expected to reach 2.75% to 3% by September 2023.

“The terminal rate has been skyrocketing,” in the futures market, said Wells Fargo’s Michael Schumacher.

Schumacher said that after peaking, the futures begin to show expectations for the fed funds rate to drop. It reaches the level of a first quarter-point rate cut by June 2024. The futures show the rate flattening out to 2% into 2025.

“You can ask yourself will they walk this back like they did in March, or are they going to roll with it?” said Axel. He said the market has priced a tightening cycle that follows the pattern of the one in 2017 through 2018, which was then followed by three cuts in 2019.

“It’s been a fast-forward of a full cycle,” said Axel. “You look at all the hikes priced in then all the cuts.”

The Treasury market has also moved sharply to reflect higher interest rates and an inflation-fighting Fed. The two-year note, which most reflects Fed policy, was yielding 2.16% Tuesday, and the 10-year note was at 2.37%.

“The change in tone and the inflation reality have both gotten more challenging in the last few weeks. The market moves are just incredible. There’s truly been no place to hide,” said Schumacher.