The European Central Bank meets for its long-awaited policy decision on Thursday, potentially spelling out the beginning of the end of its asset-buying program in what could be one of the most critical market events in 2017.
ECB President Mario Draghi is widely expected to outline a plan to begin tapering the central bank’s bond purchases, though the details of how much and when have been the subject of much speculation.
Draghi’s main challenge will be to avoid sparking a euro rally. He’s also presumably aiming to avoid a “taper tantrum” in the bond market, such as was seen in the U.S. in 2013 when Ben Bernanke, who was then Federal Reserve chairman, indicated the central bank was preparing to begin winding down its monthly asset purchases.
“Ideally, the ECB would like to announce tapering as noiselessly as possible, limiting any upward movement of interest rates and the euro to a bare minimum,” wrote analysts at ING, in a note.
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