WordValequantitative tightening
a central bank reducing its holdings to withdraw money
In more detail
a policy in which a central bank reduces the amount of money it has lent to financial institutions and reduces its holdings of bonds and other securities, in order to make credit more difficult to obtain and reduce the money supply in an economy
Examples
- The Federal Reserve announced quantitative tightening to combat inflation by reducing its bond holdings.
How to use quantitative tightening
Quantitative tightening (QT) is a technical term used in monetary policy discourse, appearing primarily in economics, finance, and financial news. It describes the reverse of quantitative easing—the deliberate reduction of a central bank's money supply and asset holdings to cool inflation or adjust monetary conditions. It is more specialized and less commonly known than its counterpart QE.
Common phrases
- implement quantitative tightening
- pursue quantitative tightening
- quantitative tightening policy
- period of quantitative tightening
- quantitative tightening cycle
- begin quantitative tightening
Synonyms
balance sheet reduction · monetary tightening · quantitative contraction · unwinding · normalization
Opposites
quantitative easing · monetary expansion · liquidity injection
Word family
quantitative (adjective) · tighten (verb) · tightening (noun/verb form) · tightener (noun)
A common mistake
Learners sometimes confuse quantitative tightening with ordinary interest rate increases, though QT specifically refers to asset portfolio reduction rather than policy rate adjustments.
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