The Bank of International Settlements warned on Sunday of a bumpy economic path ahead due to tightening monetary conditions and international markets being in a state of flux amid fears of a global trade war.

Turbulence has hit US markets in recent weeks and the European Central Bank (ECB) last week confirmed it was withdrawing its $2.9 trillion quantitative easing bond-buying programme in January.

The ECB move comes despite fears of sagging eurozone growth and the Basel-based BIS, known as the central bank’s central bank, warned of “bumps” ahead that were “a reminder of the narrow path that central banks are treading… in a generally challenging policy environment.”

In its quarterly review, the BIS said “ongoing trade tensions and heightened political uncertainty in the euro area” were causes for concern.

“Investors appeared unnerved by poor forward visibility of results, against the background of trade tensions, weakening global conditions and the Federal Reserve’s determination to move forward with gradual policy normalization,” the report added.

The “market tensions we saw during this quarter were not an isolated event,” Claudio Borio, head of the BIS’s monetary and economic department, said in a conference call.

The BIS said that disagreements between Rome and Brussels on the Italian budget plus the uncertainty of Brexit were also undermining sentiment in Europe.

Furthermore, “as December started, stock markets remained unsettled in the midst of uncertainty around trade tensions between the United States and China.”

Borio concluded that against such a depressing backdrop a return to monetary normality was “bound to be challenging,” adding that the “dark cloud” of lower-rated US corporate debt was a further worrying factor hanging over investors.

– with reporting by Agence France-Presse