What is Quantitative Easing - QE?

Welcome to the Investors Trading Academy talking glossary of financial terms and events.
Our word of the day is “Quantitative Easing”
When an economy is in danger of slipping into a recession or depression, governments can employ a strategy known as quantitative easing known as QE.
Quantitative easing is a monetary policy instituted by central banks in an effort to stimulate the local economy. By flooding the economy with a greater money supply, governments hope to maintain artificially low interest rates while providing consumers with extra money to spend more freely, which can sometimes lead to inflation.
In addition, quantitative easing can fuel economic growth since money funneled into the economy should allow people to more comfortably make purchases. This can have a trickle down effect on both the consumer and business communities, leading to increased stock market performance and GDP growth.
The important thing to remember is that quantitative easing generally leads to short-term benefits with the risk of exacerbating long-term problems. As a result, it is often used as a last resort when the economy faces a great risk of a recession or depression.

By Barry Norman, Investors Trading Academy - ITA

[shikhar]

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