Traders ramped up wagers that the European Central Bank will deliver a quarter-point interest-rate hike amid growing concerns that the region faces persistently high inflation.

Money markets now show a 70% chance that the central bank will raise rates on Thursday, compared with a 20% probability earlier this month.

The shift in expectations comes after reports that the ECB’s new economic estimates will show an inflation forecast for 2024 above 3%, strengthening the case for further tightening.

It has “definitely spurred the front-end pricing, where markets were rather complacent on a no hike scenario,” said Pooja Kumra, senior European rates strategist at Toronto-Dominion Bank. She said it’s a very close call, but ultimately expects the ECB to hold rates.

Bonds slipped, led by the short end. The German two-year yield — among the most sensitive to monetary policy — rose four basis points to 3.17%, the highest level since mid-August.

“The balance of risks is still tilted to a hike this week,” said Francesco Pesole, an FX strategist at ING Bank NV.

He’s anticipating a 25 basis point increase as the ECB tries to convince markets that its inflation fight isn’t over, and forecasts the euro will hold around $1.07.

“Markets have doubted the ability of the ECB to hike this week,” he said, citing the deterioration in economic conditions and difficulty of convincing markets over further hawkishness. “The best President Lagarde can do for the euro is to offer a lifeline.”

(A previous version of this story corrected TD’s interest-rate call in the fourth paragraph.)