Explaining Quantitative Easing – QE

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• Quantitative easing is when a central bank purchases bank assets to increase liquidity in the financial market.
• The Fed buys MBS and Treasurys from banks by issuing credit. In effect, QE increases money supply.
• It was successful as an economic stimulus following the 2008 financial crisis.
• The Fed revived QE to respond to the COVID-19 coronavirus pandemic.