Citi economists now expect the Federal Reserve to make a more aggressive 50-basis-point hike in the fed funds target rate in March.

The bank made its forecast after January’s consumer price index soared 7.5% on an annual basis, up from a 7% gain in December.

Wall Street economists have been expecting a quarter-point hike for March. Indeed, as recently as Jan. 28, Citi called for five 25-basis-point rate hikes in 2022, starting next month.

But the fed funds futures market began to price in a more likely chance of a half-point rate hike at next month’s meeting after the inflation report and hawkish comments from St. Louis Federal Reserve President James Bullard. Bullard told Bloomberg News he would like to see a full 100-basis-point hike, or a total 1% rate increase, by July.

“Details of January core CPI point to sustained inflation running around 6% and spreading more broadly, rather than slowing as Fed forecasts have assumed,” wrote the Citi economists. “We now expect the Fed to raise rates 50bp in March followed by four 25bp hikes in May, June, September and December.”

The Citi economists said they expect three further hikes in 2023, following 1.5 percentage points, or 150 basis points of hikes in 2022.

The Fed lowered the fed funds rate to zero in early 2020 to fight the pandemic.

“We expect strong core inflation to continue in February,” the Citi economists wrote. They also expect core personal consumption expenditures inflation above 3.5% fourth quarter over fourth quarter. That is well above the Fed’s median forecast 2.7% in its December economic projections.

Earlier Thursday, Grant Thornton chief economist Diane Swonk said she now expects a 50-basis-point hike in March.