The Stock Market is closely tied to Monetary Policy, and the Impact of Quantitative Easing and Quantitative Tightening can have Significant Implications for Investors.

Quantitative Easing and Quantitative Tightening are Monetary Policy tools used by Central Banks to Influence the Economy.

Quantitative Easing

Quantitative Easing

When a central bank implements Quantitative Easing, it buys government bonds or other securities from the market, effectively increasing the money supply and providing banks with more cash reserves.

 This increased liquidity in the market allows for increased lending and investment, ultimately spurring economic growth.

Fed bought bonds & mortgage assets worth trillions in QE rounds during 2008, 2014 & Covid-19 pandemic to curb economic damage.

Bond Yield Fall: Central bank bond purchases boost demand, raising prices and lowering yields. Investors turn to stocks for better returns, driving prices up.

Quantitative Tightening can lead to a decrease in the money supply, making it more expensive for businesses to borrow money and potentially slowing down economic growth.

Quantitative Tightening

Quantitative Tightening

Quantitative Tightening can have a Negative impact on the stock market

Currently, several central banks around the world are implementing Quantitative Tightening.

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