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ECB Needs to be Original on Tapering

The Fed is on a clearly flagged path to reduce stimulus, with at least two more rate rises to go this year. But if normalisation was difficult to start for Janet Yellen, Mario Draghi faces three policy dilemmas that make a tightrope walk look easy. The eurozone has consistently beaten growth expectations over the past quarters.

Yet under the hood there is a two-speed recovery in growth and inflation among its members. Core countries are leading together with Ireland and Spain, who have been early on reforms — while France, Italy and Portugal remain behind. Armed with mostly one-size-fits-all tools, the ECB will need extra skill to withdraw stimulus and keep the eurozone together.

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