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‘Chronic FEDigue Syndrome’ afflicting market: Citi

Ben Bernanke, chairman of the Federal Reserve.
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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.

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