Quantitative easing

Quantitative easing (QE) is something a central bank can do to help the economy. It is done by buying bonds or other assets. With this, the interest rate will decrease and the rate of inflation will go up. It is usually used when inflation is very low or negative. It is used when normal expansionary monetary policy doesn't work.

Quantitative easing can help bring an economy out of recession. The International Monetary Fund, the U.S. Federal Reserve, and other economists say that quantitative easing after the 2007-2008 financial crisis helped stop some problems from getting worse.

QE is used by the United States, the United Kingdom and Japan. It has helped to cause a bull market on stock exchanges. 

History
The US Federal Reserve used policies similar to quantitative easing during the Great Depression of the 1930s.Hoover Institution, Economics Working Paper 14110, "Exiting from Low Interest Rates to Normality: An Historical Perspective", November 2014 Retrieved 10 March 2015.Edward J. Pinto, American Enterprise Institute, "The 30-Year Fixed Mortgage Should Disappear," 27 April 2016, Retrieved 27 April 2016. 

 Japan before 2007 
A policy called "quantitative easing" (量的金融緩和, ryōteki kin'yū kanwa) was first used by the Bank of Japan (BOJ) to stop domestic deflation in the early 2000s.Voutsinas, Konstantinos, and Richard A. Werner, "New Evidence on the Effectiveness of 'Quantitative Easing' in Japan", Centre for Banking, Finance and Sustainable Development, School of Management, University of Southampton. The BOJ had kept short-term interest rates at close to zero since 1999. The Bank of Japan had for many years, and as late as February 2001, said that "quantitative easing ... is not effective". They did not like to use it for monetary policy.Hiroshi Fujiki et al., "Monetary Policy under Zero Interest Rate: Viewpoints of Central Bank Economists ", Monetary and Economic Studies, February 2001, p. 98. Retrieved 9 August 2010.

The Bank of Japan says that they started quantitative easing on 19 March 2001.Shirakawa, Masaaki, "One Year Under 'Quantitative Easing' ", Institute for Monetary and Economic Studies, Bank of Japan, 2002.Bank of Japan, "New Procedures for Money Market Operations and Monetary Easing ", 19 March 2001. Retrieved 9 August 2010.

References

Other websites

 Credit Easing Policy Tools Interactive chart of the assets on Federal Reserve's balance sheet.
 Deflation: Making Sure "It" Doesn't Happen Here, 2002 speech by Ben Bernanke on deflation and the utility of quantitative easing
 Bank of England – Quantitative Easing
 Bank of England – QE Explained Pamphlet
 Modern Money Mechanics  Federal Reserve Document Explaining How Money Is Created
 Quantitative easing explained (Financial Times Europe)
 A Fed Governor Discusses Quantitative Easing Among Other Topics

Category:Economics