@Lorelei Taper tantrum:When govt goes for quantitative easing (QE) or expansionary fiscal policy after a crisis, it seeks to increase money supply and inflation to boost growth. But after a couple of years it is supposed to end the QE.Govt should end QE gradually (taper it off). If it suddenly ends QE, it creates panic in the market that a restrictive policy is coming, ie. signals rising interest rates.This increasesbond yield, since bonds want to give their customers more money than if the customers were to place money in the bank accounts.This triggers stock market dip/crash, since money flows from stock market to bond market.ie. market throws tantrums like a child.
Thankyou!
