What is QE and QT? 📊
Quantitative easing (QE) is when central banks inject money into the economy by buying financial assets like government bonds. This increases liquidity, lowers interest rates, and encourages borrowing and investment, stimulating economic growth and boosting stock markets 📈
Quantitative tightening (QT) is the opposite. Central banks reduce liquidity by selling assets or not reinvesting in them, leading to higher interest rates. This slows borrowing and can cool down markets and inflation 📉
QE can drive asset prices higher, benefiting markets, while QT often puts downward pressure on prices. Both policies impact inflation, interest rates, and overall economic activity.
The Federal Reserve has been doing QT for the last 4 years and only now, along with the start of the rate cut in September, has the Fed started a QE policy, which is very bullish 🐂