By John O'Donnell
FRANKFURT (Reuters) - Mario Draghi's knack of aiming high and then fulfilling expectations did not quite come off on Thursday, raising a question mark over how much the European Central Bank and its president can be expected to act in future.
Although he is the head of the central bank, Draghi relies on consensus-building among the 19 countries in the euro zone, from conservative Germany to debt-strapped Italy, to mould policy, a task he has previously deftly managed.
This time, however, his announcement of a range of measures to enhance money-printing fell short of what investors had hoped for, prompting some to question whether Draghi is losing his magic touch.
"There was a build up of expectations based on Draghi's strong track record of overcoming political opposition," said Lena Komileva of consultancy G+ Economics.
"By wrong-footing the markets, the ECB has lost some credibility. It renews concerns about political divisions."
Since the run-up to the launch of full-scale money-printing, Draghi has established a pattern of publicly talking up prospects of action, backing sceptics such as Germany into a corner and winning the majority of ECB governors for his plan.
His powers of persuading market sceptics were most famously demonstrated in 2012 when he promised to do "what it takes" to shield the euro, instantly quelling speculation that a debt crisis could bring about the collapse of the currency.
Yet on Thursday, Draghi's words were not, in the eyes of investors, matched with the action some felt he had promised.
As recently as late November, Draghi had underlined the need for "the economy ... to move back to full capacity as quickly as possible", discussing the need for a possible recalibration of ECB support and warning of the bloc's modest prospects.
Shortly afterwards, a rare public split emerged on the six-person Executive Board, when Sabine Lautenschlaeger from Germany said she opposed an extension of money-printing.
While there have long been differing views on the bank's 25-member Governing Council, which sets interest rates, it was unusual for divisions on the Executive Board, which is at the core of ECB decision-making, to spill into the open.
There is no public record of Germany's stance at the meeting on Thursday, the recalibration, when it came, was indeed a smaller-than-expected increase in the charge on banks for depositing money with the ECB.
Its one-trillion-euro-plus money printing programme was extended by six months. That increases its size by roughly one third but there is no top-up to monthly buys. Municipal or regional debt will be included in the ECB's bond-buying shopping list although Draghi could not yet say how much this would mount to.
"My understanding is the markets expected some changes which were not forthcoming," Federal Reserve Chair Janet Yellen told United States' lawmakers.
That was perhaps an understatement given the market reaction: European shares suffered their biggest fall in three months while and the euro leapt more than 2 cents, its biggest surge since March.
"The market's disappointment is important for the future," said Toby Nangle of asset manager Columbia Threadneedle. "It limits President Draghi's ability to guide markets who will naturally become more suspicious of his power to deliver."
For once put on the defensive by journalists pressing him abut the disappointed market reaction, Draghi was at pains to point out that further action was possible and that markets would understand better the ECB moves on closer inspection.
"I think these measures need time to be fully appreciated and we'll see," he told a news conference. "Our asset purchase programme is flexible, it can always be adjusted."
(Reporting By John O'Donnell; additional reporting by Howard Schneider in Washington; editing by Mark John)
