Fed’s Schmid says Treasury buybacks don’t affect central bank’s ability to do its job

Kansas City Federal Reserve President Jeff Schmid wants everyone to know that the Treasury Department’s expanding buyback program isn’t stepping on the Fed’s toes. His message: the two operations live in separate lanes, and the central bank’s ability to steer monetary policy remains fully intact. The reassurance comes at a moment when the line between fiscal plumbing and monetary policy has rarely felt blurrier. Treasury Secretary Scott Bessent recently supercharged the department’s liquidity-support buyback program for longer-dated securities, doubling the size of each operation from $2 billion to at least $4 billion, with some operations for 10-to-20-year securities potentially reaching $6 billion. What the Treasury is actually doing Over $520 billion in dealer offerings were submitted to the program year-to-date through mid-August 2026. That’s a massive amount of supply that dealers were eager to offload, underscoring just how much demand existed for this kind of liquidity relief. These buybacks are funded by issuing other Treasuries or by drawing down the Treasury General Account. They don’t create new bank reserves the way Federal Reserve quantitative easing does. QE floods th...