What is Quantitative easing (QE)?

Quantitative easing is when a central bank gives money to the economy by buying things from big companies or governments.

Imagine you're running a lemonade stand, and you need more lemons to make more lemonade. But you don’t have enough coins in your piggy bank. So, instead of borrowing from someone else, you ask a friend (like the central bank) to give you some extra money by promising them something in return, maybe a toy or a sticker.

That’s what quantitative easing is like for a whole country. The central bank gives money to big companies or governments by buying things like bonds. This adds more money into the economy, which can help people and businesses spend more, grow, and even get jobs.

Think of your piggy bank as the money supply. When the central bank buys bonds, it's like adding coins to your piggy bank, giving you more money to use for lemonade or anything else you need. This can help keep prices from falling too much and make sure people have enough money to buy things.

It’s a friendly way of helping the economy grow when times are tough, just like how your friend helps you get more lemons so you can sell more lemonade!