European central bankers left the Jackson Hole symposium worried that recent U.S. Treasury moves signal further strain in transatlantic financial cooperation, Reuters reports. Concerns center on an unannounced yen intervention, plans to increase Treasury buybacks, and the future of Fed dollar swap lines.
European central bankers departed the Jackson Hole symposium concerned that recent U.S. policy moves could signal further strains in transatlantic financial cooperation, Reuters reported, citing more than half a dozen officials familiar with the discussions. Federal Reserve policymakers tried to reassure their European counterparts that existing commitments would hold, but they could not guarantee future policy decisions by the Trump administration.
Unannounced yen intervention worries Europe
A key source of the concern was the U.S. Treasury's Aug. 1 intervention to support the Japanese yen. Treasury Secretary Scott Bessent later confirmed that officials sold euros to buy yen, but European officials were frustrated that they had not received the customary advance notice. Recent moves involving U.S. government debt have also drawn scrutiny.
Bessent plans to increase buybacks of longer-dated Treasuries, potentially financed through greater issuance of shorter-term debt. European officials fear such measures could signal a willingness by Washington to intervene more actively to reduce borrowing costs, and one source questioned whether pressure could eventually be placed on the Fed to purchase bonds. The Treasury rejected that interpretation, saying the buybacks are meant to improve liquidity rather than impose a ceiling on interest rates.
Swap lines and Fed ties in focus
Officials also discussed the Fed's dollar swap lines with major central banks, which supply dollar liquidity during periods of financial stress. Some officials expressed concern that political tensions could eventually put the facilities at risk, though there has been no indication the swap lines face any immediate threat, and officials expect them to remain intact. The Treasury stressed that decisions over the facilities rest solely with the Fed.
Fed Chair Kevin Warsh, meanwhile, has sought to strengthen ties with overseas policymakers since taking office, including through a recent trip to Europe that left a broadly positive impression.
Source: Investing.com
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