By Matt Tracy Feb 14 (Reuters) - U.S. Treasury yields rose on Tuesday after the release of the latest consumer price index data, reflecting market expectations of tighter monetary policy from the Federal Reserve. Headline prices increased 0.5% month-over-month in January, after gaining 0.1% in December, the Labor Department said on Tuesday. Core prices, meanwhile, rose 0.4% month-over-month. Both readings fell in line with expectations of economists polled by Reuters. The Fed will need to keep gradually raising interest rates to beat inflation, two U.S. central bank officials said on Tuesday, as they put investors on notice that borrowing costs may ultimately need to go higher than is now widely expected. "Inflation is normalizing but it's coming down slowly," Richmond Fed President Thomas Barkin said on Tuesday. "I just think there's gonna be a lot more inertia, a lot more persistence to inflation than maybe we'd all want." Traders of interest rate futures now see the Fed raising borrowing costs three more times, bringing the policy rate to the 5.25%-5.50% range by July and above the 5.1% by December that policymakers previously projected. "The idea that there would be significant disinflation and a subsequent need to pull back on tightening rate policy has unwound," said Tim Schwarz, portfolio manager at Ninety One. "In the end, it was pretty much a sideways print, but certainly one that corroborates the path of higher rates deeper into the year," he said. Benchmark 10-year note yields rose to 3.760%, their highest since Jan. 3, reflecting market expectations that the Fed keeps interest rates higher for longer. Two-year yields rose to 4.624%, their highest since early November.