The remarks land as traders sharply pare bets on a September rate increase, with pricing falling to around 30 percent from more than 70 percent at the end of July. Daly's comments suggest a voting bloc within the Fed sees little urgency to act preemptively despite the bond market turmoil, which could reinforce the recent repricing lower in near term hike odds. Musalem's undecided stance, paired with his stated preference for a July hike, keeps a hawkish tail risk alive and may limit how far yields retrace even if Daly's view proves more representative of the committee. Both officials pushing back on credibility concerns, while attributing the selloff instead to fiscal financing needs and AI related capital demand, could ease the most acute fears around a de-anchoring of inflation expectations without necessarily capping the long end of the curve.---Giuseppe covered the comments from Daly and Musalem as they happened:Fed's Musalem says hiking rates now could save more aggressive action laterFed's Daly doesn't see evidence calling for pre-emptive rate hikes, policy in good place---Two Fed voices, one message on credibility, but a split on how urgent the inflation fight still is.Summary:Daly said Treasury market pricing suggests monetary policy is appropriately positioned and downplayed talk of a Fed credibility problemDaly sees no urgent need for preemptive rate cuts or hikes, noting recent data such as moderating inflation, weaker retail sales and unexpected job cuts have eased pressure to raise rates soonMusalem said he remains undecided on September, wants to keep an open mind each meeting, and still sees underlying inflation in a 2.5 to 3 percent range that is too highMusalem attributed the bond selloff to competition for capital from government financing and the AI infrastructure buildout rather than to any doubts about Fed credibilityBoth officials do not vote on the FOMC this year; three policymakers dissented in favor of a hike at the July meeting, and Musalem said he would have preferred to raise rates thenTraders now price about a 30 percent chance of a September hike, down sharply from more than 70 percent at the end of July, after 30 year yields climbed to their highest since 2007Two Federal Reserve officials pushed back on Thursday against growing chatter that the central bank's inflation fighting credibility is under threat, even as they offered differing views on how urgently policy needs to respond. San Francisco Fed President Mary Daly and St. Louis Fed President Alberto Musalem both addressed the recent bond market selloff in separate television interviews, with Daly speaking to Bloomberg and Musalem to CNBC.Daly said the Treasury market's current pricing suggests monetary policy is appropriately positioned, adding she does not see the Fed's credibility at risk. She said she has heard plenty of discussion about whether the central bank should make a preemptive move, in either direction, but does not see evidence that doing so is an urgent problem to solve. Daly, who does not vote on the Federal Open Market Committee this year, has previously backed holding rates steady, though she has cautioned that the risk of inflation becoming broader and more persistent is increasing. She noted that recent data, including moderating inflation readings in June and July, a decline in retail sales and an unexpected drop in employment, have eased pressure on the Fed to raise rates soon.Musalem struck a more cautious tone on the inflation outlook while agreeing that credibility is not the issue behind the selloff. He said he remains undecided on what to recommend at the September meeting, preferring to keep an open mind heading into every gathering, but still sees a higher probability that inflation stays above target. He put underlying inflation between 2.5 and 3 percent, describing that level as too high and in need of coming down, and said current policy settings are neutral to accommodative rather than restrictive. Musalem, who supported raising rates in July and does not vote this year, said hiking now could prevent the need for more aggressive action later. Rather than pointing to Fed credibility, he attributed the pressure on yields to competition for capital between government borrowing and the financing needs of the artificial intelligence buildout, both in the United States and globally, adding that inflation expectations remain anchored.Three policymakers dissented in favor of a rate increase at the July meeting, when the Fed held rates steady for a fifth consecutive gathering. The Treasury Department's Wednesday announcement of increased buybacks in longer dated debt briefly pulled yields lower, though most of that move reversed Thursday, with the 30 year yield climbing to its highest level since 2007. Traders now price roughly a 30 percent probability of a September rate increase, down sharply from more than 70 percent at the end of July. Federal Reserve San Fran boss Mary Daly This article was written by Eamonn Sheridan at investinglive.com.