Happy 10th Birthday to UK QE
- First, the interest rate on those government bonds would fall (a fixed coupon plus a higher price equals a lower yield). That would cut the cost of borrowing more broadly, not just for government.
- Second, the people receiving QE money for the bonds they sold to the central bank would need to put it somewhere. That would help support share prices as well as corporate bonds.
- Third, supporting the price of existing shares and bonds would make it more attractive for banks to make new loans...for entrepreneurs to start new ventures...and for investors to find new ideas to back.