Fed's Tarullo says he can't rule out a rate hike in 2016
A top US rater-setter wanted to see more evidence of sustained inflation before considering an interest rate hike.
In remarks to CNBC's 'Sqwuak on the Street' programme, US Federal Reserve governor Daniel Tarullo reportedly said he wanted to see more evidence of sustained inflation before contemplating tightening policy, but couldn't rule out an interest rate increase before the end of 2016.
Shortly before, in a speech delivered in Quincy, Massachussetts, the president of the Federal Reserve bank of Boston, Eric Rosengren, had said risks to the economic outlook were "increasingly two-sided".
As of 1547 BST the yield on the benchmark 10-year US Treasury note was rising by seven basis points to 1.67% as markets adopted a cautious stance towards rate hike expectations ahead of the central bank's 20-21 September policy meeting.
In parallel, the yield on the similarly-dated benchmark Gilt was higher by ten basis points to 0.86%.
According to the Chicago Mercantile Exchange's Fed Watch tool, Fed funds futures were discounting a 60.9% probability of a 25 basis point rate hike at the Fed's next meeting.