Europe's Central Bankers Fear Turbulence from Unpredictable US Policy

Central bankers from Europe left an annual retreat in Kansas City with concerns about the US' willingness to disrupt global cooperation. The Federal Reserve aimed to alleviate their worries by promising to uphold its commitments, but officials acknowledge that sudden policy shifts by President Donald Trump cannot be ruled out.

The recent intervention in the Japanese yen market has raised eyebrows in Europe. Treasury Secretary Scott Bessent confirmed that the US sold euros for yen and reassured regional central banks that this was simply a reallocation of resources. However, European officials were irked that they weren't given advance notice of the transaction.

Furthermore, the plan to increase buybacks of longer-dated bonds has sparked concern among European central bankers. This policy shift indicates the administration's willingness to take extraordinary measures to cap borrowing costs, and some worry it could lead to market upheaval that extends beyond the US.