U.S. rates may be heading higher than Wall Street or the Fed think

Last year, most U.S. investors and central bankers underestimated how high inflation would climb. Now they may be underestimating how high interest rates will need to go to bring it back down.

Despite the Federal Reserve's most aggressive credit-tightening campaign in four decades, the U.S. economy and financial markets started the new year with a bang. Payrolls surged, retail sales jumped and equity prices soared.