Under the programme, the central bank has been buying bonds and other debt instruments like mortgage-backed securities from the open market since 2008. As the Fed creates fresh dollars to buy these securities, it helps to pump in more dollars into the U.S. economy. QE has been carried out in the hope that increased money supply would help stimulate the economy. Other central banks like the European Central Bank too have adopted similar bond-purchase programmes to boost their respective economies. The U.S. central bank resorted to QE in the immediate aftermath of the 2007-08 financial crisis in order to boost a falling economy.

Source: The Hindu September 27, 2017 18:45 UTC