Reserve Governor Christopher Waller said the surge in long-term US Treasury yields is helping to curb demand in interest-rate-sensitive sectors such as housing and automobiles, doing some of the work of tighter monetary policy.

“When yields go up, is that going to impact interest-sensitive sectors like housing and autos and other things? Yeah, of course it is,” Waller said at Bloomberg’s New Economy Forum in New Delhi on Tuesday. While that isn’t the Fed’s intention, higher yields are “doing a little bit of the work,” he said.

Yields in the US and other advanced economies have surged to multidecade highs, tightening financial conditions. Traders have responded by paring rate-hike expectations, with the amount priced into swaps across eight major economies falling by almost 200 basis points since mid-September, according to data compiled by Bloomberg.

Last week, Waller signaled that further interest-rate hikes will likely be needed to slow inflation, though he added 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, before paring those bets after two top officials signaled policymakers have time to assess the economy before moving again.

Economists forecast that inflation data due Wednesday will show the headline rate accelerated in September on the back of energy costs due to the US-Iran war. Core prices, however, are expected to have moderated.