Fed official urges immediate rate increase

The President of the Federal Reserve Bank of St. Louis, Albert Mosalam, confirmed that the wave of selling US Treasury bonds this week reflects the bank's need to restore its credibility in fighting inflation through gradual interest rate hikes. He explained that a 25 basis point increase was preferred but was kept unchanged at the last meeting, despite opposition from three of the twelve members. These expectations have impacted the markets, with Treasury yields rising to a 19-year high, surpassing 5.2%. The likelihood of a rate hike during the current September meeting remains at 67%. This comes amid a decline in inflation in June due to falling energy prices, while concerns persist that inflation could remain above the 2% target if interest rates are not raised immediately.

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