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An analysis regarding the transition from quantitative easing to quantitative tightening in the Euro Area

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  • Laura-Mădălina IACOB (PÎRȘCOVEANU)

    (Bucharest University of Economic Studies, Romania)

Abstract

In the context of accelerating inflation growth in 2021-2022 in the Euro Area, the ECB is considering tightening monetary policy, i.e. moving from a quantitative easing (QE) monetary policy that has been practiced for almost a decade in the Euro Area to a quantitative tightening (QT) monetary policy. This article examines what this transition entails as QE provides an easing of financial conditions on a broader scale by reducing long-term interest rates, while the adoption of QT should have the opposite effect, although not necessarily of the same magnitude, i.e. reducing the size of a central bank's asset balance sheet.

Suggested Citation

  • Laura-Mădălina IACOB (PÎRȘCOVEANU), 2023. "An analysis regarding the transition from quantitative easing to quantitative tightening in the Euro Area," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(635), S), pages 63-72, Summer.
  • Handle: RePEc:agr:journl:v:2(635):y:2023:i:2(635):p:63-72
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