What Is Quantitative Easing (QE)?

Quantitative easing (QE) is an unorthodox monetary strategy in which a central bank buys longer-term assets on the open market to expand the money supply and promote lending and investment. By buying up fixed-income assets, these instruments bring additional money to the economy while also helping to decrease interest rates. It also increases the balance sheet of the central bank.
The typical open market activities of a central bank, which target interest rates, are no longer effective when short-term interest rates are at or near zero. Instead, a central bank might acquire a specific quantity of assets. To give banks additional liquidity, quantitative easing expands the money supply by acquiring assets with freshly generated bank reserves.