After having highlighted the “success” and “fruits” of the bond purchase program (QE), top officials from the European Central Bank (ECB) have taken a more cautious stance as for what should, could or would be done in the event of further degradation of the macroeconomic environment and further loss of growth momentum in emerging markets (EM).
Describing the global situation as “more challenging than before the summer,” ECB President Mario Draghi stressed that more time is needed to determine whether such situation is “temporary or permanent,” particularly in EM.
The QE continues “to have favorable impact,” however, “should downward risk weaken the inflation outlook – currently far from the 2% objective said ECB Governing Council member Ewald Nowotny – more fundamentally, we would not hesitate to act,” Draghi added. Such words, implying the QE may grow further and longer than planned, should have usually sent euro area stock markets indices higher. Not this time. Have we just entered a bear market?