Quantitative Easing | Marketplace Whiteboard

If the whole idea of Quantitative Easing is confusing to you, you are not alone. Paddy Hirsch breaks it down in this economic explainer.

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To understand QE it's important to understand that it essentially entails the Fed buying bonds to keep interest rates down, encourage lending and stimulate the economy.
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If the Fed does reduce bond buying short-term interest rates will likely rise. But the Fed doesn’t want the public to think that the Fed is raising the official interest rate. This is really difficult for the Fed because the point of bond buying is to keep interest rates low. Therefore it's logical that by buying fewer bonds the interest rates would go up.

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