Mario Draghi: ECB Ready to Do “Whatever it Takes”, Calms Markets

European Central Bank President Mario Draghi said that the bank is ready to expand its economic stimulus program if need be. The comments come just a few days after the bank’s surprisingly modest steps to shore up the regions’ economy which continues to remain in fragile state and had sent global markets in a tailspin on Friday. Draghi said that the European Central bank was ready at any time to recalibrate our array of tools. It is important to state that the ECB had announced a slight cut in one of the key interest rates but it declined to increase the size of its quantitative easing program as most investors had expected.

Many analysts believe that Draghi seemed to want to ease investor concerns repeating both in his comments that the ECB can expand its bond buying program or cut interest rates further, both moves which are seen as a huge positive for equity markets around the globe. It is imperative to state that US equity markets extended their gains post the comments from Draghi ending Friday’s trading session higher by close to 2 percent. The Euro was relatively unchanged during Friday’s trading session after witnessing a huge surge during Thursday’s trading session.

It is important to state that Europe’s economy has lagged behind the United States since the financial crisis and policymakers have struggled to keep the 19 countries that use the common currency from economic contraction. The ECB began its bond buying program several years after the Federal Reserve. Draghi cautioned though that the monetary policy stance adopted by the ECB cannot achieve everything. The slowdown in emerging markets like China continue to pose huge downside risks to the economic growth trajectory of all Eurozone economies especially Germany and France which continue to remain biggest trading partners with China.