Events

Quantitative Tightening (QT)

Quantitative Tightening (QT)

Quantitative Tightening (QT)
Monetary Event

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.

More About Quantitative Tightening (QT)

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.