Quantitative Tightening
Also known as QT
Quantitative tightening is the reverse: a central bank shrinks its bond holdings, withdrawing liquidity from the financial system.
Why It Matters
It removes a steady buyer from the bond market, and its effects tend to show up first where leverage is highest.
Related Terms
- Quantitative EasingQuantitative easing is the purchase of bonds by a central bank, created with new money, to lower long-term interest rates and add liquidity when short rates are already near zero.
- LiquidityLiquidity is how easily an asset can be bought or sold without moving its price, and how much cash is circulating in a market.
- Monetary PolicyMonetary policy is a central bank's management of interest rates and the money supply, usually to keep inflation near a target.
- Credit SpreadA credit spread is the extra yield a borrower must pay above government debt of the same maturity, compensating lenders for the risk of default.
VANTAGE52 Coverage
Published reporting filed under the topics behind this concept.
Global Economy
Fed Raises Rates as Inflation Keeps Pressure on the U.S. Economy
The Federal Reserve raised its benchmark interest rate to 3.75%–4.00% as persistent inflation keeps monetary policy under pressure.
Markets
Why A 5% U.S. Treasury Yield Could Reshape Global Markets
The 10-year is nearing a level that reprices mortgages, deals and every distant future earning.
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