Quantitative easing (QE), also known as large - scale asset purchases, is an expansionary monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to stimulate the economy and increase liquidity. An unconventional form of monetary policy, it is usually used when standard monetary policy has become ineffective at combating too low inflation or deflation. A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply. This differs from the more usual policy of buying or selling short - term government bonds to keep interbank interest rates at a specified target value.
quantitative easing refers to the process whereby the federal reserve
buys predetermined amounts of government bonds or other financial assets in order to stimulate the economy and increase liquidity