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Quantitative Easing: what’s it all about?

Quantitative Easing: what’s it all about?
Confused about monetary policy? You’re not the only one. Here we provide a jargon-free overview of what monetary policy changes might mean for your finances.

With British politicians quarrelling about who wants the least attractive job in politics, one of the biggest recent changes to global monetary policy has gone largely unnoticed. The European Central Bank (ECB) has announced that it will stop its quantitative easing (QE) programme at the end of this month. In 2019, the four-year, €2.6trn bond-buying spree, which has increased the supply of money into European commercial banks will stop.

Like similar monetary policies used by the Bank of England and US Federal Reserve, the ECB’s QE programme was designed to stimulate economic growth in the wake of the global financial crisis. And, to a certain extent, it has been successful, with the eurozone growing at its fastest rate since 2007, last year.

Put simply, investment in government bonds gave commercial banks the opportunity to decrease interest rates, thus increasing the spending power and reducing the cost of borrowing for individuals and businesses. So, does the withdrawal of the…

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