New Research Reveals Impactful Lessons for Federal Reserve Balance Sheet
The article discusses how the Federal Reserve can adjust its policies based on research on quantitative easing (QE) and quantitative tightening (QT). Research shows that QE affects asset markets the most, especially during financial crises. QE also increases central bank reserves, requiring higher reserve balances. The Fed currently uses QE to provide liquidity during crises and lower borrowing costs when interest rates are low.