📰 Fundamentals & Macro·advanced

Quantitative Easing (QE)

Also called: qe, money printing

A central bank policy of buying massive amounts of bonds to inject money into the economy and lower long-term interest rates.

Quantitative easing is a central bank tool used when interest rates are already at zero and the economy still needs more stimulus. The central bank creates new money digitally and uses it to buy government bonds (and sometimes other assets) from banks. This pumps cash into the financial system and lowers long-term interest rates by raising bond prices. QE is bullish for risk assets and bearish for the currency that's printing. When the Fed launched QE in 2008, the dollar weakened for years. When the BoJ ramped up QE in 2013, the yen lost 40% of its value. The basic principle: more supply of currency = lower price of currency. QE is controversial. It's credited with preventing depressions during the 2008 GFC and the 2020 COVID crash, but blamed for inflating asset bubbles and worsening wealth inequality. The Fed wound down its post-COVID QE in 2022 and began reversing it (quantitative tightening) in 2022-2024.

Real trade example

The Mar 2020 Fed COVID QE (essentially unlimited bond purchases) initially weakened the dollar significantly, sending EUR/USD from 1.07 to 1.23 over the following nine months as the money supply exploded.

Related terms

Quantitative Tightening (QT)

advanced

A central bank policy of shrinking its balance sheet by letting bonds mature without reinvesting — the opposite of QE.

Interest Rate

intermediate

The cost of borrowing money set by a central bank — the single most important driver of currency strength in modern forex markets.

FOMC

beginner

The US Federal Reserve's rate-setting committee — the most important meeting in global forex, held 8 times a year.

ECB (European Central Bank)

intermediate

The central bank for the eurozone — sets interest rates and monetary policy for all 20 EU countries that use the euro.

BoJ (Bank of Japan)

intermediate

The central bank for Japan — historically the most dovish major central bank, with rates near zero for decades.

CPI (Consumer Price Index)

beginner

The main inflation number — how fast prices are rising for everyday goods. Major driver of central bank decisions and forex moves.

← Back to glossary Ask the desk a follow-up →