Key facts
- The U.S. Treasury, under Secretary Scott Bessent, will at least double its purchases of long-term U.S. government debt.
- This move follows a joint foreign exchange intervention with Japan, the first in 15 years.
- The Treasury's actions are seen by some investors as potentially undermining the Federal Reserve's efforts to control inflation.
- The intervention aims to reduce borrowing costs, including mortgage rates, to stimulate the economy.
The U.S. Treasury, led by Secretary Scott Bessent, has announced a significant increase in its purchases of long-term U.S. government bonds, a move that has drawn criticism from investors and former officials. This intervention, coupled with a joint foreign exchange intervention with Japan—the first in 15 years—is seen by some as working against the Federal Reserve's efforts to curb inflation. The Treasury's stated aim is to lower borrowing costs, including mortgage rates, thereby stimulating the economy. However, critics argue that this action could undermine the Treasury's credibility and the central bank's monetary policy objectives, particularly ahead of Federal Reserve Chair Kevin Warsh's address at the Jackson Hole economic conference.