Quantitative easing

Quantitative easing (QE) is a monetary policy tool used by central banks to stimulate economic activity by increasing the money supply.

It involves the purchase of longer-term financial assets, such as government bonds or mortgage-backed securities from the open market. This process injects liquidity into the economy, helping to lower interest rates, encourage borrowing and investment, and support growth during periods of economic slowdown or recession.

QE is typically used when conventional interest rate cuts are no longer effective, such as when rates are already near zero.

While QE can help revive economic activity, it may also raise concerns about future inflation, currency devaluation, or the formation of asset bubbles.