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European central bankers fear more U.S. policy turbulence, Reuters reports - INEVSTING.COM

AUGUST 30, 2026

BY  Simon Mugo

Investing.com -- European central bankers left the Jackson Hole symposium concerned that recent U.S. policy moves could signal further strains in transatlantic financial cooperation, Reuters reported exclusively on Sunday, citing more than half a dozen officials familiar with the discussions.

Federal Reserve policymakers sought to reassure their European counterparts that existing commitments would be honored, but could offer no guarantees over policy decisions by President Donald Trump's administration.

A key source of concern was the U.S. Treasury's Aug. 1 intervention to support the Japanese yen. Treasury Secretary Scott Bessent later confirmed that euros had been sold to purchase 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. One source questioned whether pressure could eventually be placed on the Fed to purchase bonds.

The Treasury rejected that interpretation, saying increased long-end buybacks are designed to improve liquidity rather than impose a ceiling on interest rates. A Treasury official had said Thursday that the department was focused on bringing long-term yields lower after they moved above what it considered fair value.

Officials also discussed the Fed's dollar swap lines with major central banks, which provide dollar liquidity during periods of financial stress. Some expressed concern that political tensions could eventually put the facilities at risk.

There has been no indication that 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.

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