Taper Tantrum

About Taper Tantrum

In May 2013, Federal Reserve Chairman Ben Bernanke suggested the Fed might begin tapering its quantitative easing program. The mere suggestion caused bond yields to spike and emerging market currencies to crash. India, Brazil, Turkey, and South Africa saw capital flight and currency declines. The event was called the taper tantrum because markets reacted like a child being told a treat might end. The Fed did not actually begin tapering until December 2013, and it was gradual. The taper tantrum demonstrated how dependent global markets had become on Fed stimulus and how sensitive emerging markets were to US monetary policy. It foreshadowed the broader emerging market pain when the Fed actually tightened in 2022.