asset purchases

Asset purchases, often called quantitative easing, involve a central bank expanding its balance sheet by acquiring securities such as government or corporate bonds. By increasing demand for these instruments, the policy can raise their market values and reduce the returns investors require. It may also prompt investors to shift toward riskier or longer-term assets, easing financing conditions more broadly. Cheaper market funding can support household borrowing, business investment, and bank lending. In addition, the program can reinforce expectations that monetary policy will remain supportive, while purchases of securities issued by particular borrowers may lower those borrowers' financing costs directly.