The economy
Quantitative easing
Also called QE or Quantitative tightening
A central bank buying bonds with newly created money to lower long-term rates.
How it works
When short rates are already near zero, QE works on the long end of the curve directly, pushing investors towards riskier assets.
Quantitative tightening is the reverse: letting bonds mature without reinvesting, or selling them, which withdraws liquidity.
Related terms
- Central bankThe institution that sets a country’s benchmark interest rate and manages its money supply.
- Yield curveA chart of government bond yields across maturities, from months to decades.
- Interest rateThe cost of borrowing money, set at the short end by the central bank.
- LiquidityHow quickly you can turn something into cash at a fair price, without moving the price against yourself.
More in The economy
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.