US dollar gains ground

New York: The dollar jumped to session highs on Tuesday after a Wall Street Journal report that a Federal Reserve policymaker said it was safer to err on the side of "going a little too far" in fighting inflation.

The newspaper quoted St. Louis Federal Reserve President William Poole in its online edition as saying that a slowing economy on its own may not reduce inflationary pressures.

That bolstered expectations that the Fed will extend its campaign of 16 straight rate rises at its next meeting on June 28-29.

The comments echoed those of Fed Chairman Ben Bernanke, who triggered a rebound in the dollar on Monday after he said the Fed needed to be vigilant to make sure inflation stays under control.

The dollar jumped 0.5 per cent against the yen to 112.80 yen, and earlier touched a session high of 112.90 yen.

The euro was down 0.5 per cent at $1.2840 as of early morning in New York, after falling to a session low of $1.2830 shortly after Poole's comments were released.