Federal Reserve Chair Kevin Warsh met with global central bankers in Sintra, Portugal, reassuring them of the US’s commitment to international cooperation. Warsh held private meetings with counterparts from Europe and beyond, including a lengthy lunch with ECB President Christine Lagarde.

Global Cooperation

Central bank officials interpreted Warsh’s outreach as a sign the Fed would stay engaged on the global stage, easing fears of a retreat from international forums that anchor central bank cooperation. The Fed remains the ultimate provider of dollar liquidity in times of financial stress and the most influential voice in global debates on monetary policy and financial regulation.

Warsh’s reception was notable, with many attendees having previously closed ranks around former Fed Chair Jerome Powell during his clash with the Trump administration. Warsh’s fluency in French and his willingness to circulate among governors at an informal dinner also helped to build relationships with his counterparts.

Policy Alignment

Participants detected common ground on policy communication, with Warsh’s preference for simpler messaging and skepticism towards forward guidance aligning with a broader ‘back to basics’ theme running through the conference. ECB President Lagarde argued that the ECB no longer needed ‘complex forms of forward guidance’, while Bank of England Governor Andrew Bailey noted that such guidance was ‘much easier to put in place than it is to take it away’.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.