July 31 (Reuters) - A selloff in U.S. Treasuries this week signaled the need for the Federal Reserve to earn its inflation-fighting "credibility" with interest rate increases, St. Louis Fed President Alberto Musalem told the Financial Times.
"At this juncture, earlier, incremental, gradual interest-rate action is preferable, less costly and less disruptive than potentially later, larger and abrupt actions," Musalem, who is not a voting member of the Federal Open Market Committee this year, told the FT.
Musalem, who sits on the rate-setting body, told the newspaper he had "expressed a preference" towards a quarter-percentage-point interest rate increase at this week's policy meeting, where the Fed left rates unchanged.
The interest rate decision and a hint from Fed chief Kevin Warsh that the central bank may look to change its inflation goal posts helped send 30-year Treasury yields above 5.2%, a 19-year high.
The widely expected decision to leave policy on hold drew dissents from three of the 12 FOMC members who wanted a quarter-percentage-point hike instead.
#interest #musalem #year #less
"At this juncture, earlier, incremental, gradual interest-rate action is preferable, less costly and less disruptive than potentially later, larger and abrupt actions," Musalem, who is not a voting member of the Federal Open Market Committee this year, told the FT.
Musalem, who sits on the rate-setting body, told the newspaper he had "expressed a preference" towards a quarter-percentage-point interest rate increase at this week's policy meeting, where the Fed left rates unchanged.
The interest rate decision and a hint from Fed chief Kevin Warsh that the central bank may look to change its inflation goal posts helped send 30-year Treasury yields above 5.2%, a 19-year high.
The widely expected decision to leave policy on hold drew dissents from three of the 12 FOMC members who wanted a quarter-percentage-point hike instead.
#interest #musalem #year #less
3 months ago
