Quantitative Easing (QE)

Quantitative easing is an unconventional monetary policy where a central bank creates new money to buy financial assets — usually government bonds — in order to inject liquidity into the economy and push interest rates lower when conventional rate cuts have reached their limit. It generally weakens a currency by expanding its supply and signaling a prolonged low-rate environment. The reverse process, quantitative tightening (QT), shrinks the central bank's balance sheet and typically supports the currency by tightening financial conditions.