Glossary Term

Quantitative Easing

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Quantitative Easing is an unconventional monetary policy where central banks print money and use this money to purchase financial assets from banks and other financial institutions. This has the effect of injecting liquidity into the economy by increasing the money supply. It also raises the value of the assets purchased and makes it easier for businesses and individuals to borrow money. QE is known as an unconventional tool as it’s used when other more conventional methods, such as lowering interest rates, have failed. When interest rates have been lowered to zero (or even below zero as was the case with the 2008 crisis) the only tool available to jump-start the economy is to begin printing money and conducting large scale asset purchasing.

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What is quantitative easing? A Traders Expert explanation

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