Quantitative Tightening (QT) Definition - Glossary

Quantitative Tightening (QT) is the process where central banks reduce the money supply by selling government bonds.

Quantitative Tightening (QT) is a monetary policy used by central banks to decrease the money supply in the economy. This is achieved by selling government bonds or letting them mature, effectively reducing the amount of money circulating in the financial system. The goal of QT is to increase interest rates, curb inflation, and stabilize the economy. It is the opposite of Quantitative Easing (QE), which aims to increase the money supply. QT impacts borrowing costs, asset prices, and overall economic activity.