Analysis: Federal Reserve may be pulled into Bessent’s effort to support Japan’s yen

Federal Reserve Chairman Kevin Warsh speaks during a news conference at Federal Reserve Headquarters in Washington on July 29, 2026.Win McNamee | Getty ImagesThe Federal Reserve may soon be drawn into the Trump administration's efforts to back the embattled currency of U.S. ally Japan. Treasury Secretary Scott Bessent wants the apolitical Fed to expand a lending facility that would enable Japan to support its currency without roiling the sensitive U.S. Treasury market. That request comes as new Fed Chairman Kevin Warsh is seeking to rewrite the relationship between the Treasury and the Fed. How the two collaborate could have important consequences for the management of the $29 trillion Treasury market and could see the Fed take on a new role backing U.S. financial diplomacy. It isn't clear how much support the chairman has within the Fed for major policy changes. The Fed declined to comment.The Treasury didn't respond to a request for comment about its plans. Read more CNBC politics coverageBessent said in a post on X on Sunday that the U.S. had intervened in foreign exchange markets to support the Japanese yen. It is routine for Japan intervene to on behalf of its perennially weak...