One of the most talked about topics in the financial arena is the impending end of Quantitative Easing 2 dubbed (“QE2”). So what is QE2? Does the end of QE2 signify the end to the stock market rally? Any possibility of QE3?
For the purpose of this write-up, I have presented the gist of my thoughts in the form of Questions and Answers in an abridged manner to answer some of your queries.
Q1. What is QE2? What does it achieve?
A1: QE is an alternative monetary policy tool to stimulate the economy by driving down long term interest rates and increasing money supply in the financial system when conventional monetary policy tools are not effective.
In simple terms, the U.S. Federal Reserve (“Fed) prints money and buy government bonds and other financial assets. This achieves four objectives. Firstly, as it prints money to buy those government bonds and ...
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