While the Fed last week restated its belief that the current inflation surge would be short-lived, many investors worry that underestimating price increases could prove to be a costly policy mistake. While the Federal Reserve is already tapering its bond buying, rising inflation may force it to hike interest rates sooner than expected said Nancy Davis, founder of Quadratic Capital Management in Greenwich, Connecticut. Data had also shown on Tuesday that U.S. producer prices increased solidly in October, driven by surging costs for gasoline and motor vehicle retailing, suggesting that high inflation could persist.