Quantitative Easing (QE)

Quantitative Easing (QE) is a monetary policy used by central banks to boost the economy during times of slow growth or recession. The central bank creates new money and buys financial assets, such as government bonds, from banks and financial institutions. This increases the banks’ reserves, encouraging them to lend more to businesses and consumers. The goal is to lower interest rates, make borrowing cheaper, and stimulate economic activity. However, QE can also lead to higher inflation if used excessively. It’s a tool to support economic stability when traditional policies, like lowering interest rates, are not enough.