The European Central Bank’s (ECB’s) recent announcement of another stimulus package was met with disappointment by some market participants, but Tom Clarke, co-portfolio manager on William Blair’s Dynamic Allocation Strategies team, told CNBC Europe TV it is a positive for the markets. The new stimulus also highlights that central banks can always do more in response to sluggish economic growth, he says.

Investors have been worried for years that central banks are running out of road to continue to support markets, but that’s proved incorrect, Clarke said in the CNBC interview.

“There really isn’t an end point to the flexibility and creativity that central banks can employ.”
-Tom Clarke, Partner, Portfolio Manager

“There really isn’t an end point to the flexibility and creativity that central banks can employ,” Clarke concluded.

The new ECB asset purchase program of 20 billion euros a month followed the previous round of 60 billion euros a month, and Clarke said he does not see an upper limit to future programs.

 Monetary vs. Fiscal Policies

As it relates to monetary and fiscal policies, Clarke told CNBC he believes that stimulus is significantly “skewed” toward monetary policies across the eurozone, and one does not influence the other.

“While the president of the ECB can call on eurozone governments to do more to stimulate growth, governments and heads of state will decide fiscal policy on their own,” Clarke said. “As we’ve seen in the United States, heads of government can ask central banks to do more but central banks—for the most part—still do what they would have done anyway.”

At the same time, nobody thought that the ECB policy rate could be negative as it currently is. Clarke told CNBC that he believes it could go even more negative, especially if tiering of interest rates is involved.

Watch Tom Clarke’s CNBC interview

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Please carefully consider the Funds’ investment objective, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus and summary prospectus, which you may obtain by calling +1 800 742 7272. Read the prospectus and summary prospectus carefully before investing. Investing includes the risk of loss.

Any statements or opinions expressed are those of the author as of the date of publication, are subject to change without notice as economic and markets conditions dictate, and may not reflect the opinions of other investment teams within William Blair Investment Management, LLC or the Investment Management Division of William Blair & Company, L.L.C.

This content is for informational and educational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions.

Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Investments are subject to market risk. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Statements concerning financial market trends are based on current market conditions, which will fluctuate.

William Blair does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax questions and concerns.

Distributed by William Blair & Company, L.L.C., member FINRA/SIPC.

Copyright © 2019 William Blair & Company, L.L.C. "William Blair” is a registered trademark of William Blair & Company, L.L.C. No part of this material may be reproduced in any form, or referred to in any other publication, without express written consent.

Statement of Financial Condition | NMS Rule 605 & 606 | Business Continuity Plan | UK Stewardship Code
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