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.