Europe's Central Bankers Fear Unpredictable US Policies Will Spark Global Turmoil

Europe's central bankers are growing increasingly concerned about the deteriorating relationship between the US and other countries, particularly in Europe. At the annual Jackson Hole Economic Symposium, Federal Reserve policymakers attempted to ease the concerns of their European counterparts by promising to honor all of their commitments. However, despite these assurances, many officials believe that long-standing norms in global cooperation are at risk due to the unpredictable nature of the Trump administration.

The recent US Treasury interventions in the Japanese yen and longer-term US borrowing costs have been particularly concerning for European central bankers. The move to prop up the yen and lower longer-term US borrowing costs was seen as a break with norms, and many officials worry that this could lead to more intervention and pressure on other countries.

One of the key concerns is that President Trump has shown a willingness to take extraordinary measures to get his will across, which could set off upheaval in markets beyond the US. The European officials are worried that this could eventually involve the dollar liquidity backstops provided by the Fed to the world's biggest central banks, considered a cornerstone of global financial stability.