Cadence Research · Reviewed 2026-07-30
What is quantitative easing?
Quantitative easing, or QE, is a policy in which a central bank buys financial assets, usually government bonds, to lower longer-term borrowing costs and support financial conditions. It is most often used when conventional interest-rate cuts are limited or when market functioning is under strain. QE changes the size and composition of the central bank's balance sheet.
Why it matters
QE can affect longer-term yields and market liquidity even when the policy rate is unchanged. It is therefore a separate part of the policy stance.
How it appears in official communication
Central banks explain which assets they will buy, how much they will purchase, and the objectives of the program. They may distinguish purchases for monetary policy from operations that support market functioning.
A common misunderstanding
QE is not simply printing money for government spending. It is an asset-purchase program conducted through financial markets under the central bank's mandate.
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Related guides
Primary sources
- What is quantitative easing? (Bank of England)
- Monetary Policy: What are its goals? (Federal Reserve)
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