What is 'Quantitative Easing 2 – QE2'
The second round of the Federal Reserve's monetary policy used to stimulate the U.S. economy following the recession that began in 2007/08. QE2 was initiated in the fourth quarter of 2010 in order to jump-start the sluggish economic recovery. The Federal Reserve announced plans to buy $600 billion in long-term Treasuries, in addition to the reinvestment of an additional $250 billion to $300 billion in Treasuries from earlier proceeds from mortgage-backed securities. This, in theory, would push yields on Treasuries and bonds down, creating a surge in investment and consumption expenditures.
Explaining 'Quantitative Easing 2 – QE2'
Quantitative easing was intended to stimulate an economy through a central bank's purchase of government bonds or other financial assets. Often, central banks use quantitative easing when interest rates are already zero bound, or at near 0% levels. This type of monetary policy increases the money supply and typically raises the risk of inflation. Quantitative easing is not specific to the U.S., however, and is used in a variety of forms by other major central banks.
Further Reading
Quantitative easing in the United Kingdom: evidence from financial markets on QE1 and QE2academic.oup.com [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
The effects of quantitative easing on interest rates: channels and implications for policywww.nber.org [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
On the international spillovers of US quantitative easingacademic.oup.com [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
Quantitative easing and proposals for reform of monetary policy operationspapers.ssrn.com [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
A global monetary tsunami? On the spillovers of US Quantitative Easingpapers.ssrn.com [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
The effect of Fed's quantitative easing on stock volatilitypapers.ssrn.com [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
Effects of quantitative easing on asia: capital flows and financial marketspapers.ssrn.com [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
The effects of quantitative easing on bank lending behavioracademic.oup.com [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
Impact of US quantitative easing policy on emerging Asiapapers.ssrn.com [PDF]… financed by the creation of central bank money, is widely referred to as 'quantitative easing' (QE) (see Bernanke and Reinhart, 2004), in contrast to 'credit easing', which is … nominal spending and thereby domestically generated inflation, so as to meet the MPC's 2 per cent …
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