Don't Expect Bond-Buying by Europe's Central Bank: Pro

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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.

"There is a danger that the market is expecting the ECB to go embarking on bond purchases [as] pure, full-on quantitative easing. And I doubt if that's going to happen because of the political pressures," McCaughan said in a CNBC interview.

Stock investors have reacted favorably the prospect that the Fed could take up a third round of QE as soon as this week. Still, McCaughan doubts the ECB's actions will completely placate the market.

"What [Draghi] didn’t say was that he’s going to keep all investors whole," McCaughan said, adding that a potential QE3 from the Fed would be a "policy mistake." Potential central bank action is "not really a license just to take risk."