Glossary · from the DESK dictionary
Quantitative Easing (QE)
A monetary policy measure in which a central bank buys large quantities of securities to increase the money supply and lower interest rates.
In plain words
When rate cuts alone aren't enough, the central bank effectively "prints" money to buy bonds and pump liquidity into the system.
In more detail
Quantitative easing denotes central bank purchases of bonds to lower long-term rates once the policy rate is already at zero. The effect works through several channels: portfolio rebalancing, signalling about future rate policy, and improved market liquidity. Empirical assessment remains contested — effect estimates range from substantial to negligible, and the distributional effects via rising asset prices are undisputedly considerable.
Example
A central bank buys bonds worth 15 percent of GDP. The ten-year yield falls 90 basis points and equities rise 40 percent — the effect on the real economy is markedly harder to demonstrate than the effect on asset prices.
What it means for traders
A central concept for understanding monetary policy since 2008 and its effects on asset prices.
Common pitfalls
Associated with longer-term risks such as asset-price bubbles and potentially elevated inflation.
Related terms
Accommodative Monetary Policy · Ben Bernanke · Economic Stimulus · The Global Financial Crisis (2007-2009) · Government Debt Monetization · Government Quantitative Easing · Green Quantitative Easing · Helicopter Money · Outright Purchases · Qualitative Easing · Quantitative Easing Tapering · Quantitative Tightening (QT) · Reflation · Unconventional Monetary Policy · Central Bank Balance Sheet
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.