Charts That Count: Europe's taper tantrum

Synopsis

Europe faces a potential taper tantrum as European Central Bank (ECB) officials signal a reduction in quantitative easing (QE) bond purchases, resulting in rising bond yields. This situation echoes the 2013 Federal Reserve tapering announcement, which similarly caused spikes in yields. The ECB's balance sheet, encompassing trillions of euros, highlights its history of premature stimulus withdrawal, notably before the 2008 Lehman Brothers collapse and during the eurozone sovereign debt crisis. With core inflation remaining below the 2% target, concerns grow about the implications of tightening monetary policy too soon.