Dow Jones
The president of the St. Louis Federal Bank said Thursday he doesn't think the higher mortgage rates that accompany increases in bond yields are likely to derail the housing recovery.
The benchmark 10-year Treasury yields hit a fresh two-year high Thursday following upbeat economic data from the US and the UK.
St. Louis Fed Chief James Bullard said in a meeting with reporters that rising yields raise a concern the economic recovery could suffer, but "the level of yields now is still quite low by historical standards."
"I also think that momentum in housing is stronger than any effects that are going to come from higher yields, at least for now," he said.
A voting member of the Fed's decision-making committee, Mr Bullard has also been vocal about his concerns that inflation is running too far below the Fed's two per cent target.
The consumer price index rose 0.2 per cent last month after rising 0.5 per cent in June, the Labor Department said Thursday.
Mr Bullard said he hadn't looked at the report, and would want to study it to get a better idea of what is happening with prices, but "to the extent you have higher inflation numbers in this report that would be bolstering the notion that inflation would naturally be moving back toward target in the coming months and quarters."
"I have felt that because inflation is below target, that we can sort of take our time and allow more information to come in" before deciding to pull back on the Fed's $US85 billion bond-buying program, he said. "We don't have to be in any hurry to taper."
Mr Bullard stressed he plans to go into the Fed's Sept. 17-18 policy meeting with "an open mind" and hasn't prejudged what the central bank will do about the bond program at that meeting.