What Is Quantitative Easing? Meaning & Example
Definition
Quantitative easing is when a central bank buys large amounts of bonds or other assets to push down longer-term interest rates and support the economy. It increases the money supply.
Related terms
A central bank manages a country's money supply and sets key interest rates. Its goals often include stable prices and healthy employment.
Monetary PolicyMonetary policy refers to central bank actions, such as setting interest rates and managing the money supply, to influence the economy. Tighter policy cools activity, while looser policy supports it.
BondA bond is a loan you make to a government or company in exchange for regular interest payments and the return of principal at maturity. Bond prices tend to fall when interest rates rise.
What is Quantitative Easing?
Quantitative easing is when a central bank buys large amounts of bonds or other assets to push down longer-term interest rates and support the economy. It increases the money supply.
Can you give an example of Quantitative Easing?
During a severe downturn, a central bank might buy government bonds to make borrowing cheaper.