Fed Mulling Bigger Rate Increase, Says Wsj

The Fed could act as soon as its next policy meeting on September 24 after analysing key economic data, including employment and inflation indicators, the WSJ quoted unnamed Federal Reserve officials as saying.

If the data showed an overheating economy, Fed policy-makers were leaning towards raising the federal funds target rate half a percentage point, twice what markets now expect, the report quoted the officials as saying. The rate stood at 5.37/50 per cent at Friday's close.

The US Treasury's benchmark 30-year bond dived to a quote of 95.00-95-02/32 at 0630 GMT from a Tokyo high of 95-22/32 on the report and news that the US military had launched cruise missile strikes against air-defence targets in Iraq in retaliation for Iraqi military attacks against Kurds.