On Wednesday, the US Federal Reserve decided not to cut on the $85-billion bond-buying programme fuelling stock rallies around the globe. Loosely interpreted as printing money by some, Quantitative Easing (QE), which involves injecting liquidity into the economy through purchases of long-dated assets, became the favoured policy option for the Fed as its original monetary policy tool, the federal funds rate, had already touched zero following several cuts since 2007. It began with buying of agency mortgage-backed securities to restart the market that had gone into a deep freeze following the collapse of Lehman Brothers in September 2008. In the first edition, it ended bloating the Fed's balance sheet by over $2 trillion but had little impact on the local economy as most of the liquidity found its way to emerging market stocks and commodities. QE2 and QE3 have been a different story as the Dow and Nasdaq have emerged clear winners. Business Standard breaks down the three phases
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