Federal Reserve Governor Christopher Waller said the surge in long-term U.S. Treasury yields is helping to curb demand in housing and automobiles. Higher yields are "doing a little bit of the work" of tighter monetary policy, Waller said at Bloomberg's New Economy Forum in New Delhi.
Last week, Waller signaled that further interest-rate hikes will likely be needed to slow inflation. He added that officials have some flexibility on timing as they contemplate another increase.
The Federal Open Market Committee voted unanimously last month to raise its benchmark rate for the first time since 2023. Investors initially saw a high chance of another increase at the Fed's Oct. 27-28 meeting.
Waller said artificial intelligence is also putting upward pressure on prices as the rapid build-out of AI infrastructure fuels demand. He said the AI-driven price pressures could last for two or three years.