Quantitative easing, meet quantitative tightening

The Indicator from Planet Money

NPR

Business

4.7 • 9.2K Ratings

🗓️ 4 May 2022

⏱️ 10 minutes

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Summary

To try and slow inflation, the Federal Reserve is going beyond its typical tool of raising interest rates, and adopting a policy of "quantitative tightening." So ... what is that, exactly?

Transcript

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0:00.0	NPR.
0:03.0	If the Fed has one main tool for fighting inflation, it's the ability to control interest rates.
0:17.6	Interest rates are to the Fed, what the magic wand is to Harry Potter, or the heart-shaped
0:23.2	herb is to Black Panther.
0:25.3	What square pants are to SpongeBob?
0:27.0	Yes.
0:28.0	That's why the US's Central Bank, the Federal Reserve announced today that it is hiking
0:32.0	its interest rates a half percent.
0:34.9	Last time that happened was more than 20 years ago.
0:37.6	And today we're going to talk about another tool that was part of today's announcement.
0:41.5	Right, we're going to focus on a lesser known tool, a relatively untested tool called quantitative
0:47.7	tightening.
0:48.7	This is the indicator from Planner Money, I'm Adrian Ma, and I'm Joanne Woods.
0:52.7	Today on the show we're going to explain everything quantitative tightening, what it is, how it
0:57.3	works, and why even the people whose job it is to follow this stuff, like bankers, economists,
1:03.2	investors, broadcasters, maybe especially broadcasters, are not sure whether this will
1:08.6	help cool inflation or derail the economy completely.
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	...

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