Quantitative Easing (QE)

Quantitative easing is a central bank policy of buying large quantities of bonds (usually government bonds) to inject money into the financial system and push down longer-term interest rates, used when short-term rates are already near zero and conventional rate cuts have no more room to work.

QE tends to support asset prices broadly, since it pushes investors out of low-yielding bonds and into stocks and other riskier assets in search of return, an effect often called the "portfolio rebalancing channel." Its unwind, sometimes called quantitative tightening, works in reverse and has historically coincided with more volatile markets.