‘Chronic FEDigue Syndrome’ afflicting market: Citi

Ben Bernanke, chairman of the Federal Reserve.
Getty Images
Ben Bernanke, chairman of the Federal Reserve.

The ailment plaguing markets at the moment is incurable, contagious and set to continue, according to analysts at Citi, who dubbed it "Chronic FEDigue Syndrome."

Ever since Ben Bernanke, the chairman of U.S. central bank the Federal Reserve, announced the winding down of its asset purchase program - a process dubbed "tapering" - earlier this year, the question of when and how tapering will begin has been one of the dominant themes driving global markets.

This has led to an "incurable contagious disease related to ambiguity in monetary policy," according to Steven Englander, managing director and global head of G10 strategy at Citi. He described the symptoms as "characterized by fatalistic faith in authority figures who are believed to both forecast the future and adhere to predictable, pre-committed behavior."

The Fed's Federal Open Market Committee, perhaps the most influential group of central bankers in the world, met on Tuesday, and is expected to give more guidance on the tapering program following the conclusion of its meeting on Wednesday. The meeting is always closely watched, but is likely to be even more so this month.

(Read more: Tapering's not the real market risk)

Central banks around the world have pumped money into the financial system to try and avert the worst effects of the global economic slowdown and market meltdown which followed the credit crisis, but there are concerns in the market about how this process will be unwound.

The Fed is expected to start by reducing its asset purchases by around $10-15 billion, according to Englander. He said that a lower reduction of $5 billion would be "dovish" and push down rates on U.S. Treasurys, whereas a $20 billion cutback would push them up.

(Read more: What if we get no tapering?)

Markets are likely to continue to be volatile at Bernanke's press conference on Wednesday, he added.

"Given the number of policy, timing and language balls in the air… we are likely to see a lot of volatility both around the statement and during the press conference," Englander said.

Follow Catherine on Twitter: @cboylecnbc

Contact Europe News


    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Europe Video

  • Alexis Tsipras, opposition leader and head of the leftist Syriza party, waves at supporters during a campaign rally in central Athens, Greece, Janu. 22, 2015.

    The left-wing Syriza party has won the elections in Greece, promising an end to the austerity program struck with the Troika. Experts comments on whether the new government can fulfill its promises and what it means for the euro zone.

  • Saudi Arabia's stock market has reopened after the recent passing of King Abdullah. Hadley Gamble reports the latest.

  • With the Greece election results, Steven Englander, global head of G10 FX strategy at Citi discusses how easily the euro currency could fall to parity against the U.S. dollar.