When is quantitative easing justified

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What if it is right? Perhaps the spread of the COVID Delta variant will prompt fresh lockdowns in developed countries and damage emerging markets even more. Perhaps more nasty variants will emerge. And perhaps the negotiations in Congress will break down, with even the bipartisan infrastructure bill failing to pass. In this scenario, however, it would be hard to justify the stock-market buoyancy and breakeven inflation rate.

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I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Economics Macroeconomics. Table of Contents Expand. Quantitative Easing QE Basics. Quantitative Easing QE Challenges. Does Quantitative Easing Work? The Bottom Line. Key Takeaways Quantitative easing QE is a form of unconventional monetary policy used by central banks as a way to quickly increase the domestic money supply in hopes of spurring economic activity.

Quantitative easing involves a country's central bank purchasing longer-term government bonds, as well as other types of assets, such as mortgage-backed securities MBS.