Quantitative Tightening (QT) is the opposite of Quantitative Easing (QE). It takes place when the Federal Reserve destroys money by not re-investing the proceeds from maturing assets into new assets
Can cause rates to increase (less currency is available) and a stronger currency (supply is limited)
Every 600B of QT is estimated to equate to a roughly 1% rate hike
QT is a reduction in the Federal Reserve's balance sheet
Also can be referred to as "balance sheet normalization
Before its start in 2017, Quantitative Tightening has never been attempted by a central bank
People have various theories about how it will impact markets - but it has never been tested
QT is uncharted territory!
Some argue that if QE helped stock markets rise, QT must cause them to fall.
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