Quantitative Easing (QE)

Quantitative easing is a type of monetary policy in which a central bank, such as the United States Federal Reserve, uses to reduce interest rates. To lower interest rates and boost the amount of money in circulation, the Federal Reserve buys securities on the open market. By generating additional bank reserves, quantitative easing increases banks' liquidity and promotes lending and investment. QE policies are carried out by the Federal Reserve in the US and by the European Central Bank in Europe.