The Implications of U.S. Quantitative Easing

The U.S. Federal Reserve announced Nov. 3 that it will engage in quantitative easing (QE), a method of expanding the money supply often used when an economy is in a recession. The amount of QE the Fed intends to allow, compared to the size of the U.S. economy, is at most moderate. Rather than being intended to revamp the economy, the move likely is instead a means of rebuilding confidence in the U.S. economy. Likewise, it could be a way to set the tone for currency policy discussions at the G-20 summit on Nov. 11.