A hotter-than-expected U.S. inflation reading Thursday cemented the case for another leap-up in short-term borrowing costs from the Federal Reserve in three weeks' time, and a higher top Fed policy rate by early next year.

Traders of U.S. interest-rate futures had already all but priced in a fourth straight 75-basis-point hike at the close of the Fed's Nov. 1-2 meeting.

But after a Labor Department report showed accelerating inflation pressures in September, they began also pricing a one-in-10 chance of a 100-basis point rate hike.

Traders now expect the Fed to ultimately lift its target rate to a 4.75%-5% range by March of next year, higher than Fed policymakers signaled just three weeks ago.

(Reporting by Ann Saphir; editing by John Stonestreet)