Understanding Quantitative Easing: Impacts on Inflation and Investments

Understanding Quantitative Easing: Impacts on Inflation and Investments

The Basics of Quantitative Easing: A Comprehensive Overview

Quantitative easing (QE) is a monetary policy tool used by central banks to stimulate the economy during times of low growth or recession. It involves the central bank buying government bonds or other financial assets from commercial banks, thereby injecting money into the economy. The aim is to increase the money supply, lower interest rates, and encourage borrowing and investment. QE is typically employed when traditional monetary policy tools, such as lowering interest rates, have been exhausted.