Two Federal Reserve presidents said on Thursday they are watching Treasury’s recent shift to faster purchases of long‑term government debt and its potential effect on monetary policy.

The Treasury announced Wednesday it will accelerate the pace of its longer‑term Treasury buyback program, a move that lifted long‑term yields earlier in the week before they fell again on Thursday. Higher yields have been driven by concerns about the size of the federal debt and inflation that remains above the Fed’s 2% target.

Musalem said the Fed’s policy focus remains on the labor market and inflation, and that it conducts monetary policy independently of debt management or fiscal actions. He indicated a possible rate increase at the September 15‑16 meeting, noting that financial conditions are currently accommodative. Daly said current long‑term bond yields provide limited guidance for policy adjustments and that she supports leaving rates unchanged, while monitoring longer‑dated securities. Bessent explained that the accelerated buybacks aim to signal that yields do not reflect underlying economic fundamentals and emphasized that any Fed rate decision is separate from Treasury activity. The Treasury also said it would cooperate with the Fed if the central bank’s balance sheet changes, adjusting to any bond runoff.

The Fed’s next policy meeting is scheduled for September 15‑16, and officials said they will wait for clearer data on how the Treasury’s actions influence inflation and employment before determining the path of interest rates.