Economy
Quantitative Easing (QE)
Definition
A monetary policy tool where a central bank purchases government bonds or other financial assets to inject money into the economy and lower long-term interest rates.
Explanation
QE was pioneered by the Bank of Japan in 2001 and used extensively by the Federal Reserve, ECB, and Bank of England after the 2008 financial crisis and during COVID-19. By buying bonds, central banks push down yields, making borrowing cheaper and encouraging investment. Critics argue QE inflates asset prices (stocks, real estate) and benefits the wealthy disproportionately. The reverse process — "quantitative tightening" — involves selling bonds to drain money from the financial system.