What Is 'Quantitative Easing'?

Quantitative easing (QE) refers to emergency monetary policy tools used by central banks to spur iconic activity by buying a wider range of assets in the market. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Quantitative Easing (QE) Quantitative easing (QE) is a form of unconventional monetary policy in which a central bank purchases longer-term securities from the open market in order to increase the money supply and encourage lending and investment. Buying these securities adds new money to the economy, and also serves to lower interest rates by bidding up fixed-income securities. It also greatly expands the central bank's balance sheet. When short-term interest rates are at or approaching zero, normal open market operations, which target interest rates, are no longer effective. Instead, a central bank can target specified amounts of assets to purchase.Quantitative easing increases the money supply by purchasing assets with newly created bank reserves in order to provide banks with more liquidity. Read More » Related to "Quantitative Easing (QE)" How Central Banks Control the Supply of Money A look at the ways central banks add or remove money from the economy to keep it healthy. Read More » How Does Quantitative Easing Affect the Bond Market? See why it is very difficult to evaluate the impact of the Federal Reserve's quantitative easing, or QE, program on bond prices and yields. Read More » How the Federal Reserve Affects Mortgage Rates The Federal Reserve can impact mortgage rates when it changes to fed funds rate. Read More » SPONSORED BY INVESCO The Complete Guide to ETFs ETFs are becoming increasingly popular and soaring to new heights among investors. Invesco's insights can help you determine if these investment vehicles are right for you. Learn More » Related Definitions Monetary Policy Actions of a central bank or other agencies that determine the size and rate of growth of the money supply, which will affect interest rates. Read More » Government Security Government securities are bonds issued by a government. Government securities can also pay interest. U.S. Treasury bonds are an example. Read More » Money Supply The money supply is the entire stock of currency and other liquid instruments in a country's economy as of a particular time. Read More » Liquidity Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC, All Rights Reserved | Privacy Policy