Draghi Studies Fed Exit as ECB's Guide on What to Do and Avoid
- ECB has so far adopted same normalization sequence as the U.S.
- Lessons include averting taper tantrums, playing a long game
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Mario Draghi has six months left to prepare a retreat from ultra-loose monetary policy, and he has a ready-made roadmap on hand.
The U.S. Federal Reserve’s experience of halting quantitative easing, raising interest rates and starting to shrink its balance sheet provides both a blueprint and a cautionary tale for the European Central Bank president. It’s an easy example of what he and his colleagues should aim for, or avoid.