European central bankers wary of further instability in US ties

European central bankers left an annual gathering with their US counterparts concerned that long-standing norms of global financial cooperation may be weakening, officials familiar with the discussions said.

JACKSON HOLE, Wyoming: European central bankers left an annual gathering with their US counterparts concerned that long-standing norms of global financial cooperation may be weakening, officials familiar with the discussions said.

More than half a dozen officials attending the Kansas City Federal Reserve’s annual Jackson Hole Economic Symposium said US policymakers had sought to reassure their European counterparts.

The Fed officials stressed their commitment to existing arrangements, the sources said. But they could not guarantee that President Donald Trump would not introduce sudden policy changes.

European officials were particularly concerned by recent US Treasury interventions involving the Japanese yen and longer-term US government debt.

US Treasury Secretary Scott Bessent said the Treasury sold euros for yen during an August 1 intervention. He later said the euros came from the Treasury’s Exchange Stabilization Fund.

European officials were frustrated that Washington had not given them the customary advance notice that euro sales would be involved, according to the sources.

One official described the lack of notification as “infuriating”, saying central banks normally receive a warning before such transactions.

Other officials took a more forgiving view. They said the unusual nature of the operation could mean the omission was simply an oversight.

A US official said the intervention was aimed at countering disorderly movements in the yen and supporting stability in global financial markets.

“It was not directed at anyone else,” the official said.

The Treasury has also announced plans to increase buybacks of longer-dated US government bonds. European officials fear such measures could signal greater intervention in financial markets.

One source questioned whether pressure could eventually be placed on the Fed to purchase bonds directly.

The US official rejected that suggestion. The buybacks are intended to improve liquidity in longer-dated Treasury markets and are not monetary policy, the official said.

Another concern among European central bankers is the future of dollar liquidity arrangements provided by the Fed to major central banks.

The swap lines allow foreign central banks to obtain US dollars during periods of financial stress. They are widely viewed as an important safeguard for global financial stability.

The sources said there had been no indication that the arrangements were at risk. They nevertheless worried that political considerations could eventually affect them.

The Treasury stressed that decisions on Fed facilities and swap lines rest with the central bank.

Meanwhile, Fed Chairman Kevin Warsh has sought to strengthen ties with international counterparts since taking office, the sources said.

At Jackson Hole, Warsh also took part in the customary photograph with Bank of Canada Governor Tiff Macklem.

The gesture came as Trump pursues an increasingly bitter trade dispute with Canada.