There is an issue though because eventually printing money will lead to trouble for Europe, since it is more of a short-term solution than a longer term solution, but it does show that Europe is going to be doing everything possible to ensure that China’s situation does not harm the economy too much. “To know what are the origins of this change, and especially whether this is just the beginning of permanent lower long-term output, or a transitory phenomenon, is what we would hope to know more about…in the G-20”.

On Thursday, the European Central Bank downgraded its inflation forecast and left the door open to extend and expand its bond buying program that now stands at 60 billion euros ($66.7 billion) per month and is due to expire in September 2016.

He made clear that the bank could increase the size of its purchases, and prolong the program if necessary.

Kraemer, a skeptic of such bond-buying programs, argued that more stimulus would not help, saying it would only support financial markets, while taking pressure off eurozone governments to reform their economies.

Officials see consumer prices barely growing this year with an increase averaging 0.1 per cent. Inflation will then accelerate to 1.1 per cent in 2016 and 1.7 per cent the next year, Dr Draghi said.

Investors bet that the problems European Central Bank President Draghi is confronting – a weaker outlook for global growth as well as inflation – make up the same headwinds that will this month deter the Fed from raising interest rates for the first time in nearly a decade.

However, European markets ended sharply higher.

The ECB’s dovish message on Thursday outweighed any jitters over a U.S. jobs report later in the day that could determine whether the Federal Reserve raises interest rates this month or waits until December.

“We are observing a weakening of the prospects of the Chinese economy”, he said.

Inflation at the moment is running around 0.2%, way below the 2% the European Central Bank is targeting.

“It’s clear that of course that there are limits to the effectiveness of monetary policy”, he added.

On the plus side for the eurozone, a Fed rate increase could also strengthen the dollar against the euro, boosting the eurozone’s trade position.

Draghi warned that the forecasts could be lowered even further as they were compiled with data gathered before 12 August, and do not take into account the market chaos that has rocked global trading floors in recent weeks. A figure above 50 indicates expansion. The Standard & Poor’s 500 index rose 11 points, or 0.6 percent, to 1,960 and the Nasdaq composite rose 13 points, or 0.3 percent, to 4,763.

The Nikkei stumbled more than three percent in the afternoon before ending down 2.15 percent.