“Federal Reserve Chairman Ben Bernanke will likely announce plans to stimulate the economy via a third round of asset purchases from banks in the near future, as it’s just a question of when and not if, said Pimco Managing Director Neel Kashkari.
Under quantitative easing (QE), the Fed buys assets like Treasury holdings or mortgage-backed securities from banks, pumping the economy full of liquidity to push down borrowing costs and encourage investing and hiring, sending stock prices rising in the process.
The Fed has rolled out two such rounds since the downturn, injecting $1.7 trillion into the economy in a first round and then $600 billion in a second round with freshly printed money. ”
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