Quantitative easing (QE) monetary policy and its impact on inflation
Authors: Khodakevich Serhii , Khokhych Dmytro , Berezovyk Vadym 
Published: September 2024

The relevance of the study is due to the turbulent development of European economies, which directly affects the choice of monetary policy regime. This policy is characterised by quantitative easing (QE) in response to weak demand during a prolonged recession. Today, European central banks continue to use QE and short-term interest rates as additional instruments of conventional policy to curb inflation and stimulate economic growth. The purpose of the article is to analyse the monetary policy of quantitative easing (QE) and its impact on inflation dynamics in European countries. The research methodology includes a systematic method of cognition to determine the feasibility of using conventional and non-conventional monetary policy instruments to overcome monetary shocks of recession; an abstract and logical method to understand the monetary policy strategy of European central banks in the post-crisis period, based on short-term interest rate cuts under the inflation targeting regime; a statistical method to analyse the dynamics of inflation in national economies. Results. The article presents a retrospective analysis of the quantitative easing (QE) monetary policy and its impact on the inflationary processes of European countries in the medium term. The practical significance of the research results is to assess the consequences of the application of the monetary policy of quantitative easing (QE) in developed European countries and to analyse the deviations of central banks' inflation forecasts from its actual values. The originality of the article is due to the need to determine the prospects for the application of the monetary policy of quantitative easing (QE) and its impact on inflationary processes in the post-crisis period. Conclusions. Lower interest rates and increased public spending stimulate aggregate demand, which results in an unwinding of the inflationary spiral. The transition to inflation targeting and interest rate hikes rarely occurs in a neutral macroeconomic environment. In practice, especially in emerging economies, monetary policy tightening is often a reaction to external shocks. Crises of this type are accompanied by a sharp jump in devaluation, inflation, a decline in GDP, instability in the financial sector, and a slowdown in economic growth. Russia's full-scale invasion of Ukraine has had an impact on the economies of European countries. The uncertainty of the duration of the hostilities is holding back economic activity. Trade disruptions are leading to new shortages of materials and inputs. Rising energy and raw material prices are reducing supply and demand. The development of the European economy will crucially depend on how events in Ukraine develop, under the influence of external sanctions imposed by the aggressor country and possible further measures. At the same time, economic activity is still supported by the economic recovery from the crisis phase of the pandemic. Inflation increased significantly and remained high in 2023, mainly due to a sharp rise in energy prices. Inflationary pressures increased in many sectors of the economy.