asset purchases

Asset purchases refer to the process where a central bank, like the Federal Reserve, buys financial assets such as government bonds from banks and financial institutions. This action injects liquidity into the economy by increasing the money supply, encouraging lending and investment. It is often used to stimulate economic growth and lower interest rates during times of economic slowdown. The central bank's goal is to support employment and stabilize prices without directly influencing everyday transactions, leveraging market operations to influence broader economic conditions.