Quantitative Easing Explained: How It Works and Its Impacts

Quantitative easing (QE) is a monetary policy tool used by central banks to stimulate economic growth and increase inflation. It involves the purchase of government bonds and other securities by the central bank, which increases the money supply and lowers interest rates. This encourages banks to lend more money to businesses and individuals, which in turn stimulates economic activity. Quantitative easing is typically used when other monetary policy tools, such as adjusting interest rates, have proven ineffective in stimulating the economy. However, it can also lead to inflation and other economic risks if not managed carefully.