quantitative easing
Central bank stimulus
Quantitative easing is a monetary policy where a central bank creates new money to purchase government bonds or other financial assets, injecting cash into the economy.
The goal is to stimulate spending and lending when conventional tools like lowering interest rates have been exhausted: The Federal Reserve turned to quantitative easing during the 2008 financial crisis.
Often abbreviated QE.
US central banking system
- monetary policyCentral bank economic controls
- Bank of JapanJapan's central monetary authority
- Bank of EnglandUK monetary authority
- FOMCFed's policy-setting body
What prompts a reaction
- economic recoveryReturn to prosperity
- financial stabilitySound economic standing
- reflationPolicy-driven economic revival
- borrowing costsFees for using loaned funds
Creating new currency supply
- inflation riskThreat of diminishing value
- moral hazardConsequence-free risk-taking incentive
- asset bubblesUnsustainable price inflation
- inequalityUnequal distribution of resources
Returns on debt instruments
- carry tradeBorrowing cheaply to invest higher
- risk appetiteCapacity for accepting uncertainty
- asset bubblesUnsustainable price inflation
Federal Reserve
US central banking system
- monetary policyCentral bank economic controls
- Bank of JapanJapan's central monetary authority
- Bank of EnglandUK monetary authority
stimulus
What prompts a reaction
- economic recoveryReturn to prosperity
- financial stabilitySound economic standing
- reflationPolicy-driven economic revival
money printing
Creating new currency supply
- inflation riskThreat of diminishing value
- moral hazardConsequence-free risk-taking incentive
- asset bubblesUnsustainable price inflation
bond yields
Returns on debt instruments
- carry tradeBorrowing cheaply to invest higher
- risk appetiteCapacity for accepting uncertainty
- asset bubblesUnsustainable price inflation
government securities
State-backed debt instruments
- economicssupply and demand, inflation, GDP, GNP, gross domestic product
- economyGDP, money, inflation, inflation rate, GNP
- economic historystock market crash, Industrial Revolution, trade routes, Great Depression, gold standard
- economic policymonetary policy, tax policy, fiscal discipline, fiscal stimulus, fiscal restraint
- economic termssupply and demand, free market, bull market, bear market, inflation rate
- modern economicsGDP, GDP growth, recession, inflation, interest rates
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