NEW YORK (AP) — European Central Bank President Mario Draghi said Friday the bank is ready to expand its economic stimulus program if need be, just a day after the bank's surprisingly modest steps to shore up the region's economy sent shudders through global financial markets.
"We are ready at any time to recalibrate our array of tools," Draghi said.
The comments came during a speech at a meeting of the Economic Club of New York on Friday. On Thursday in Frankfurt the ECB announced a slight cut in one of its key interest rates, but it declined to step up its monthly purchases of bonds, as investors had expected, to reduce borrowing costs for consumers and businesses. Investor disappointment about the decision sent European stock markets to one of their worst days in months.
Draghi seemed to want to ease investor concerns Friday, repeating both in his speech an in response to questions from a panel that the ECB can expand its bond-buying program, known as quantitative easing, or cut interest rates even further, if necessary.
When asked by one of the panelists if was trying to clarify what the ECB did this week, Draghi said jokingly: "No...not really. Well, of course."
European markets were closed for the day when Draghi appeared. U.S. stocks were sharply higher Friday, and they extended their gains after Draghi began speaking at midday Eastern time. The Dow Jones industrial average closed up 2 percent. The euro was mostly unchanged against the dollar at $1.0870, after surging on Thursday.
Europe's economy has lagged behind the U.S. since the financial crisis, and policymakers have struggled to keep the 19 countries that use the euro from economic contraction. The ECB started its bond-buying program in 2014, several years after the Federal Reserve started its program.
Draghi cautioned, though, that the ECB's ability to stimulate growth — even if it does take further action — is limited.
"Our monetary policy cannot achieve everything," he said.
Ken Sweet can be reached at http://twitter.com/KenSweet .