Easing
Easing is a financial term used to describe a situation in which the central bank of a country reduces the interest rate or increases the money supply in order to stimulate economic growth. This is done by lowering the cost of borrowing money, which encourages businesses to invest and consumers to spend. It is also known as monetary policy easing or quantitative easing.
History of Easing
The concept of easing has been around since the early 20th century, when central banks began to use it as a tool to manage the economy. In the 1930s, the US Federal Reserve used easing to help the country recover from the Great Depression. Since then, easing has been used by central banks around the world to help stimulate economic growth.
In the wake of the 2008 financial crisis, central banks in the US, Europe, and Japan began using a new form of easing known as quantitative easing. This involves the central bank buying large amounts of government bonds and other financial assets in order to increase the money supply and lower interest rates. This has been used to help stimulate economic growth in the wake of the crisis.
Comparison Table
| Type of Easing | Interest Rate | Money Supply |
|---|---|---|
| Traditional | Lower | No Change |
| Quantitative | Lower | Higher |
Summary
Easing is a financial term used to describe a situation in which the central bank of a country reduces the interest rate or increases the money supply in order to stimulate economic growth. This is done by lowering the cost of borrowing money, which encourages businesses to invest and consumers to spend. Traditional easing involves lowering the interest rate, while quantitative easing involves increasing the money supply. For more information about easing, you can visit the websites of the US Federal Reserve, the European Central Bank, and the Bank of Japan.
See Also
- Monetary Policy
- Interest Rate
- Money Supply
- Quantitative Easing
- Central Bank
- Fiscal Policy
- Inflation
- Deflation
- GDP
- Economic Growth
