Answer to Question #64059 in Finance for Genie

Question

How easing of monetary policy works through the exchange rate and what potential impact on the economy this would have

Answer 1

Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. Quantitative easing increases the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. So, this policy will stimulate the economy and decrease interest rate.