Saturday, June 27, 2015

Term of the Day: Quantitative Easing

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June 27, 2015
Quantitative Easing

An unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. Quantitative easing is considered when short-term interest rates are at or approaching zero, and does not involve the printing of new banknotes.

Investopedia Explains:

Typically, central banks target the supply of money by buying or selling government bonds. When the bank seeks to promote economic growth...

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Related Definitions

Budget Deficit
Fiscal Policy
Quantitative Easing 2 — QE2
Sterilized Intervention
Federal Funds Rate

Past Terms of the Day

Current Account Deficit
International Monetary Fund - IMF
Risk-Return Tradeoff
Delta-Gamma Hedging
Modified Internal Rate Of Return - MIRR
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