Europe’s comfort blanket is being pulled away — Ambrose Evans-Pritchard

Jon Economy, Fiscal Policies, Market Commentary

The long-feared moment of bond tapering in the eurozone has arrived. The comfort blanket is being pulled away – gently – for the first time since the region first crashed into a debt crisis.
The European Central Bank has tried to cushion the blow with dovish rhetoric and a glacially slow exit but there is no denying that monetary policy has reached a critical turning point. “The ECB has delivered an unwelcome surprise,” said Luigi Speranza from BNP Paribas.
It comes as China takes action to choke off a property bubble and rein in shadow banking. The world’s three big monetary blocs will all be draining liquidity at the same time.
The ECB will wind down quantitative easing from 80bn to 60bn a month when the current programme expires in March. Societe Generale says that this is just the start, predicting more tapering of 10bn in June, and then further cuts of 10bn at each meeting – a truly drastic outlook.

This post was published at The Telegraph