Tuesday 20 October 2015

Quantitative Easing

Quantitative easing


Definition

An unconventional monetary  policy in which a central bank purchases government securities or other securities  from the market to in order to lower interest rates and increase the money supply. Quantitative easing  is a  monetary policy to increase money supply in the market when there is recession or condition when market is going down .Quantitative easing is considered when short term interest rates are approaching zero or at zero . quantitative easing does not involve printing of new Notes
Quantitative easing targets commercial banks and financial firms  to encourage lending .
Effect  :---
·                                     Very effective in financial slowdown
                                             Done for economic growth
·                                       But too fast quantitative easing can lead to inflation    

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