European Central Bankers Leave Jackson Hole Worried by US Policy Moves

European central bankers are leaving the Federal Reserve’s annual Jackson Hole symposium increasingly concerned that established norms of international economic and central-bank cooperation are being weakened by recent U.S. policy actions. More than half a dozen officials attending the Kansas City Fed's annual gathering expressed concerns about the future of the relationship with Washington.

Fed Officials Seek to Reassure European Counterparts

Federal Reserve policymakers sought to reassure their international counterparts that the Fed intends to honour its existing commitments and maintain established relationships. However, because of the Federal Reserve's institutional separation from the U.S. administration, Fed officials could not provide guarantees against unexpected policy changes by President Donald Trump.

U.S. Intervention in the Yen Raises Concerns

One of the biggest issues was the U.S. Treasury's recent intervention to support the yen. Following the move, U.S. Treasury Secretary Scott Bessent confirmed that the Treasury had acted. Bessent subsequently said the foreign-exchange assets used to purchase yen came from the Treasury's own holdings. The Treasury described the transaction as an effort to counter disorderly movements in the yen and support stability in global financial markets.

European officials were particularly concerned that Washington apparently failed to provide the customary advance notification that such an operation was coming. One official described the failure to provide a warning as “infuriating,” arguing that governments would normally communicate before undertaking such an operation. For some European policymakers, the incident raised a broader concern that Washington is becoming increasingly willing to act unilaterally in global financial markets. Other officials were more sympathetic, suggesting that because the transaction was highly unusual, the failure to notify European counterparts could simply have been an oversight.

Treasury Defends the Intervention

A U.S. official said the intervention was specifically intended to address disorderly movements in the yen and promote stability in global financial markets. The official stressed that the operation was legitimate and said the Treasury continues to communicate closely with international counterparts.

Debt Buyback Strategy Creates Further Concern

European central bankers are also concerned about Bessent's plans to restructure the U.S. debt portfolio. The transactions could potentially be financed through greater issuance of shorter-term Treasury securities. European officials view the initiative alongside the yen intervention as evidence that the U.S. administration may be increasingly willing to use financial tools aggressively.

The concerns emerging from Jackson Hole extend beyond individual Treasury operations. They centre on whether longstanding conventions governing international economic coordination are changing. For European policymakers, unexpected U.S. intervention could complicate management of their own currency policies, particularly if Washington increasingly pursues domestic financial objectives without the level of international coordination traditionally expected.