Treasury Outlook

QE or Quantitative Easing is unconventional monetary policy, which should be applied only when interest rate is on the ground and lower interest rate couldn't impact the market as traditional practice. 

Consequently, QE seems to be one of the last resources for policy makers to aid the economy.  

In the current situation, in which most benchmark interest rate hit record low around the globe, we are flooded with a variety of stimulus package initiated by many governments.  The concrete recovery is still far to reach.

QE comes into our sense of many Central Banks. Why QE?  How QE works? 

QE is an unorthodox monetary policy referred to creation of a predetermined quantity of new money through Central Bank's channel, usually buying financial institution's asset such as government bond, security or debenture. 

It is simply said to "print money".  The aim is to inject cash into the system, which will enlarge the Central Bank's balance sheet. 

QE has been found in the market for decade in Japan and recently in US, UK and Swiss. 

US policy maker pay the wish that applying QE would bring the government bond yield, corporate bond yield, and mortgage rate etc lower, reducing the borrowing cost and sending real impact to ordinary people than declining the benchmark rate.

Theoretically QE could incur the inflation risk. 

The expected rising inflation will reduce the value of money, affect the purchasing power, and ultimately induce people to spend more rather than save more money.

However, it is still in discussion how QE effective because printing more money doesn't mean more spending or it could only be a measure to improve the market sentiment.  The situation could be found in Japan.

What a consequence will be is beyond prediction or envision. 

However, we can lend our hand to help the economy through spending more. 

Although the weather outside is so hot, please don't stay inside the house all day. 

Come out and spend!  Helping our economy and helping our world!