Quantitative Easing

Quantitative Easing (QE) is a monetary policy tool used by central banks to stimulate an economy by purchasing large quantities of government bonds or financial assets, increasing the money supply and lowering interest rates. In forex markets, QE typically weakens the currency of the issuing country, as the increased supply reduces its relative value. For example, when the U.S. Federal Reserve launches QE programs, the USD often depreciates against major currency pairs. Traders monitor central bank QE announcements and tapering decisions closely, as these decisions can trigger significant and prolonged currency movements.