I just realized that many people still confuse QE and QT, so today I will clearly explain these two concepts.

Let's start with QE. Quantitative easing is when central banks pump money into the economy by buying assets like government bonds. As a result, liquidity increases, interest rates decrease, and people are encouraged to borrow money for investment. This often stimulates economic growth and pushes the stock market higher.

The opposite is QT. Quantitative tightening is when central banks reduce liquidity by selling assets or not reinvesting in them. Then, interest rates rise, borrowing becomes more difficult, and the market may experience downward pressure.

Looking at the actual effects, QE usually causes asset prices to rise, giving investors an advantage. Meanwhile, QT exerts downward pressure on prices. Both policies significantly impact inflation, interest rates, and overall economic activity.

Interestingly, the Fed has been implementing QT continuously for the past four years. But recently, when they started cutting interest rates from September, they shifted back to QE. This is a rather optimistic signal for the market, indicating that the Fed is preparing to create more favorable conditions for the economy. Someone said that QE is "free money" for the market, and historically, when QE occurs, assets tend to appreciate.