FRANKFURT — The European Central Bank is focused on avoiding a policy error committed four years ago by its big brother, the Federal Reserve.
When the Fed indicated — on May 21, 2013 — that it would gradually wind down its $85 billion-a-month bond-buying program, asset prices and currencies plunged around the world in an episode known as the taper tantrum.
Now, as the economy on this side of the Atlantic finally starts to recover, investors are watching closely for signs of a similar policy turn from the ECB.
The bank’s top officials have acknowledged the improved economic outlook. But they have yet to make any change at all to their aggressive monetary stimulus, which includes EUR60 billion, or about $67 billion, a month of bond purchases and subzero interest rates.
That is partly the Fed’s fault: ECB officials worry that even a small change in communications could ricochet through financial markets, undoing their extensive efforts to support growth and inflation.
“You all remember the ‘taper tantrum’ in the U.S., and I think the central banks prove to be good learners,” Bostjan Jazbec, who sits on the ECB’s 25-member rate-setting committee, told The Wall Street Journal on Wednesday.
The minutes of the ECB’s latest policy meeting, published on Thursday, underlined similar concerns. Officials worried that a minor change in language could cause investors to quickly price in a completely new policy path, toward higher interest rates.