"Quantitative easing (QE) is a monetary policy action where a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity."
Explanation of what quantitative easing is, how it works, and the potential risks and benefits.
"Quantitative tightening (QT) does the opposite, where for monetary policy reasons, a central bank sells off some portion of its holdings of government bonds or other financial assets."
"Quantitative easing usually involves the purchase of riskier or longer-term assets (rather than short-term government bonds) of predetermined amounts at a large scale, over a pre-committed period of time."
"Central banks usually resort to quantitative easing when their nominal interest rate target approaches or reaches zero."
"Very low interest rates induce a liquidity trap, a situation where people prefer to hold cash or very liquid assets, given the low returns on other financial assets."
"Quantitative easing can help bring the economy out of recession and help ensure that inflation does not fall below the central bank's inflation target."
"QE programs are also criticized for their side-effects and risks, which include the policy being more effective than intended in acting against deflation (leading to higher inflation in the longer term), or not being effective enough if banks remain reluctant to lend and potential borrowers are unwilling to borrow."
"Quantitative easing is a novel form of monetary policy that came into wide application after the financial crisis of 2007–2008."
"Quantitative easing is used to mitigate an economic recession when inflation is very low or negative, making standard monetary policy ineffective."
"Quantitative easing has also been criticized for raising financial asset prices, contributing to inequality."
"Quantitative easing...raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply."
"Quantitative easing usually involves the purchase of riskier or longer-term assets (rather than short-term government bonds) of predetermined amounts at a large scale, over a pre-committed period of time."
"QE programs are also criticized for their side-effects and risks, which include...not being effective enough if banks remain reluctant to lend and potential borrowers are unwilling to borrow."
"Quantitative tightening (QT) does the opposite, where for monetary policy reasons, a central bank sells off some portion of its holdings of government bonds or other financial assets."
"Quantitative easing was undertaken by some major central banks worldwide following the global financial crisis of 2007–2008, and again in response to the COVID-19 pandemic."
"Quantitative easing can help bring the economy out of recession and help ensure that inflation does not fall below the central bank's inflation target."
"Very low interest rates induce a liquidity trap, a situation where people prefer to hold cash or very liquid assets, given the low returns on other financial assets."
"Quantitative easing has also been criticized for...the policy being more effective than intended in acting against deflation (leading to higher inflation in the longer term)."
"Quantitative easing can help bring the economy out of recession and help ensure that inflation does not fall below the central bank's inflation target."
"QE programs are also criticized for their side-effects and risks, which include...not being effective enough if banks remain reluctant to lend and potential borrowers are unwilling to borrow."