Yamamoto International: Mounting calls for an expansion of the European Central Bank’s bond-buying program have been left unanswered as the Bank’s President, Mario Draghi, leaves policy unchanged.

Weeks of volatility on global markets have raised concerns over the consequences for Europe’s anemic recovery from the slowdown in China and particularly from the deflation that the falling cost of its goods would export to the rest of the world.

Although Mr. Draghi left the size of the existing bond-buying program unchanged at €1 trillion, he did emphasize that the ECB stood ready to act if further stimulus was required.

“Given the reluctance with which Mr. Draghi launched the current program, we don’t think he particularly relishes the prospect of adding more stimulus. We think the main motivation for mentioning more QE was the euro,” said a YMI Yamamoto International European markets analyst, alluding to the sharp fall in the currency’s value against a basket of other currencies including the US dollar in the moments following his statement.

Under the existing quantitative easing program, the ECB buys €60 billion worth of bonds each month. Mr Draghi said that the program could be extended to run beyond the September 2016 deadline if conditions warranted.

Despite official figures for inflation, many Europeans have become concerned about the rising cost of food and housing which are generally left out of the calculations leading to what Yamamoto International has called a “distortion of the true cost of experimental monetary policy”.

“This 2% inflation target the central banks are trying to achieve is folly. Inflation is notoriously difficult to manage,” concluded the analyst.