Investors anticipating a full-fledged quantitative easing by the European Central Bank may be waiting for Godot, said Jim McCaughan, chief executive officer of Principal Global Investors.
Last week, ECB President Mario Draghi sparked a furious rally in markets after he suggested the central bank would do whatever it took to preserve the single currency. Expectations are growing that Europe's monetary authorities will unleash a wave of massive bond-buying on par with the Federal Reserve's efforts to spark a U.S. rebound.
McCaughan, however, thinks markets are over-interpreting Draghi's remarks. The central bank is hamstrung by political realities — including a mandate much more narrowly drawn than that of the Fed — that makes a massive QE program unlikely, he said.