New ECB warning: Tapering fallout could be worse than 1994

A senior European Central Bank(ECB)policymaker has issued a fresh warning the impact of the US Federal Reserve reducing its massive stimulus programme might exceed that of 1994.

Speaking in Brussels, Jörg Asmussen, a German member of the ECB executive board, said policymakers must learn from the mistakes in communicating a shift in US monetary policy in 1994, the Financial Times reports. His comments come as financial markets await the results of a key meeting of the Fed next week which could see a tapering of asset purchases as soon as this month. Asmussen said: "In early 1994, when the US recovery gained strength, the Fed started a tightening cycle and bond markets crashed not only in the US but also around the world. "If spillovers were large in 1994, w...