The full name of QE is “”, quantitative easing mainly refers to the central bank after the implementation of zero or near zero interest rate policy, through the purchase of national bonds and other medium and long-term bonds, increase the supply, to inject a large amount of liquidity into the market intervention, to encourage spending and borrowing.
When you talk about quantification, let’s say the $700 billion quantitative policy that was put in place, $500 billion to buy Treasury bonds, $200 billion to buy mortgage-backed securities.
It’s not hard to see that quantification is simply throwing money at the market by buying things like Treasury securities.
In fact, the principle of this process is very simple: on the one hand, you can issue, but you can only buy financial assets;
The central government, on the other hand, can buy goods and services and send money to its people, but it cannot print money.
So to stimulate the economy, the central bank and the government have to work together. By buying government bonds, the central bank is essentially lending money to the government so that it can “spread it out”.
As for easing is better understood, put bluntly is “cut interest rates”, can also be understood to reduce the borrowing costs of each bank’s funds.
In general, QE is an unconventional way of injecting large amounts of liquidity into the market by increasing the base.
On top of that, the unlimited QE PLUS+, in effect, means that the Fed is ready to turn on the printing presses and print money.
The Fed cut the federal funds reserve rate to zero in an emergency rate cut and announced the resumption of an estimated $700bn quantitative easing programme.
From this point of view, the starting point is often a sharp drop in interest rates.
When interest rate tools fail, central banks will consider quantitative easing to tame the economy.
This week will see U.S. CPI data, which could provide further guidance for the Fed.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
