The Federal Reserve is risking a 1937-style relapse with its early quantitative easing exit, warns the international business editor of London's Daily Telegraph.

"The entire pivot by the Federal Open Market Committee is mystifying, almost amateurish, and risks repeating the errors made by the Bank of Japan a decade ago, and perhaps repeating a mini-1937 when the Fed lost its nerve and tipped the US economy into a second leg of the Great Depression," asserts Ambrose Evans-Pritchard of the U.K. newspaper.

The Fed risks deflation by tapering its monthly bond-buying before the U.S. economy has adequately recovered, he writes. By winding down QE while core inflation is at a record low, the Fed is violating its own counterdeflation strategy.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

The Fed is apparently ignoring the economic impact of U.S. fiscal tightening, even though it amounts to 2 to 3 percent of GDP. The central bank seems to think the housing recovery has become entrenched, he adds, noting that the plunge stocks of homebuilders' stocks suggests otherwise.

The Fed, he charges, raised its unemployment target for shrinking QE from 6.5 to 7 percent and "concocted feeble excuses" to explain away the drop in 10-year TIPS (Treasury Inflation Protected Securities) that indicate long-term inflation concerns.

Although it's pretending that the speed of the recovery will dictate the pace of the QE exit, the Fed, in fact, set a date that disregards the economy, the columnist writes.

That's another big mistake. It should strive to meet economic objectives, not calendar dates.

"That the Fed should tighten even as it cut its own growth and inflation forecasts for this year is a bizarre state of affairs," he says. It should have waited for stronger signs of economic improvement before announcing plans to end QE, he argues, quoting dissenting St Louis Fed chief James Bullard.

Federal Reserve Chairman Ben Bernanke, the columnist adds, is turning against his arguments about fighting inflation he made before being named chairman. In 2002 he urged a 1 to 3 percent inflation rate as a buffer against deflation.

The Fed may be succumbing to political pressure from the right, even though the right's predictions that loose monetary policies would create inflation have been wrong, declares New York Times columnist Paul Krugman.

Fed officials may be starting to agree with critics who say QE risks inflating bubbles, Krugman says. "But I hope that’s not true, since whatever damage low rates may do is trivial compared with the damage higher rates, and the resulting rise in unemployment, would inflict."

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.