July 31 (Reuters) – A selloff in U.S. Treasuries this week signaled the need for the Federal Reserve ‌to earn its inflation-fighting “credibility” with interest rate increases, ‌St. Louis Fed President Alberto Musalem told the Financial Times.

“At this juncture, ​earlier, incremental, gradual interest-rate action is preferable, less costly and less disruptive than potentially later, larger and abrupt actions,” Musalem, who is not a voting member of the Federal ‌Open Market Committee ⁠this year, told the FT.

Musalem, who sits on the rate-setting body, told the newspaper he ⁠had “expressed a preference” towards a quarter-percentage-point interest rate increase at this week’s policy meeting, where the Fed left rates unchanged.

The ​interest rate ​decision and a hint ​from Fed chief Kevin Warsh ‌that the central bank may look to change its inflation goal posts helped send 30-year Treasury yields above 5.2%, a 19-year high.

The widely expected decision to leave policy on hold drew dissents from three of the 12 ‌FOMC members who wanted a quarter-percentage-point ​hike instead.

The Three Fed officials who ​dissented expressed concern ​on Friday that without an immediate increase in ‌short-term borrowing costs inflation will ​stay stuck ​above the Fed’s 2% target, where it has been for more than five years.

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

(Reporting by Natalia Bueno Rebolledo in ​Mexico CityEditing by Shri Navaratnam)