The Federal Reserve must reverse course and start raising interest rates within the next few quarters to head off the near-certainty of rising inflation, according to a former member of the Fed’s rate-setting panel, the FOMC.

William Poole, who retired at the end of March as head of the Federal Reserve Bank of St Louis, said allowing inflation to bail out homeowners and the mortgage market was one of three options open to policymakers as they confront the growing mortgage crisis in the US. However, he said it was the choice that he feared most.