Fed Seeks Inflation Credibility Amid Treasury Selloff

A selloff in U.S. Treasuries has led Federal Reserve officials to consider boosting interest rates to combat inflation, St. Louis Fed President Alberto Musalem told the Financial Times.

Musalem expressed a preference for a quarter-percentage-point increase at the most recent policy meeting, where rates remained unchanged.

The decision drew dissents from three FOMC members who wanted a rate hike to address inflation concerns, which have persisted above the 2% target for over five years.

Traders are now betting on a 67% chance of a 25-basis-point rate hike in September, according to CME Group's FedWatch tool.