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How quantitative easing works

9 December 2016 (updated on 25 August 2021)

Asset purchases, also known as quantitative easing or QE, are one of the tools that we at the ECB use to support economic growth across the euro area and bring inflation to our 2% target.

Explore how the asset purchase programme works
1

The European Central Bank buys bonds from banks.

2

This increases the price of these bonds and creates money in the banking system.

3

As a consequence, a wide range of interest rates fall and loans become cheaper.

4

Businesses and people are able to borrow more and spend less to repay their debts.

5

As a result, consumption and investment receive a boost.

6

Higher consumption and more investment support economic growth and job creation.

bubble-inflation
7

As prices rise, the ECB achieves an inflation rate of 2% over the medium term.

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