What Is Quantitative Easing (QE)?

Patrick Curtis

Reviewed by

Patrick Curtis WSO Editorial Board

Expertise: Investment Banking | Private Equity

Quantitative Easing is the name given to government policy to increase the money supply by injecting liquidity into the economy. This is done by buying government assets back from the market.

The reason behind using quantitative easing is that it will increase the capital within the financial sector and therefore increase the amount which banks lend to consumers and small businesses, in an effort to promote economic growth. Quantitative easing is usually only done when interest rates are already extremely low and there are no other measures which can be taken.

Unfortunately, there is very little evidence to show that QE helps at all; in fact the evidence is to the contrary. The negative impact of QE is that an increase in the money supply without a corresponding increase in demand for money is likely to push up inflation.

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Patrick Curtis

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.