Quantitative easing
Also called: QE, quantitative tightening, QT
Quantitative easing is when a central bank creates money to buy large amounts of bonds, pushing long-term interest rates down to support the economy when short-term rates are already near zero.
The Fed used it after 2008 and in 2020. The reverse, shrinking its holdings, is called quantitative tightening.
Related terms
- Monetary policy: Monetary policy is how a central bank manages interest rates and the money supply to keep inflation low and employment high.
- Money supply: The money supply is the total amount of money in an economy.
- Federal funds rate: The federal funds rate is the interest rate at which US banks lend reserves to each other overnight.
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