-
Quantitative Tightening: What is it and How Does it Work?
Quantitative tightening (QT) is a contractionary monetary policy tool used by central banks to reduce the level of money supply, liquidity and general level of economic activity in an economy. You may be asking yourself why any central bank would wish to lower the level of economic activity. They do so begrudgingly when the economy overheats, causing inflation, which is the general increase in the prices of goods and services typically purchased in the local economy. Most developed nations and their central banks set a moderate inflation target around 2% and that is because a gradual increase in the general level of ... (full story)