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Quantitative easing, or QE, can affect interest rates in a few different ways. When a central bank engages in QE, it buys financial assets, such as government bonds, from commercial banks and other financial institutions. This increases the amount of money in the banking system, which can lead to lower interest rates.
Firstly, as banks receive more money, they may have more funds to lend out to borrowers, and the increased competition for borrowers can drive down interest rates. Secondly, QE can also put downward pressure on long-term interest rates, which are important for things like mortgages and business loans, by reducing the supply of longer-term bonds and increasing their prices.
However, the impact of QE on interest rates is not always straightforward and can depend on a variety of factors, such as the overall health of the economy and the goals of the central bank. Additionally, other factors, such as market expectations and investor sentiment, can also influence interest rates.
At Horizon65 we can help you to determine if company pensions are worth it for you by using our mobile app to simulate its effect on your future taking into your existing investments and potential impact of inflation and taxation.
We regularly help our clients by comparing all the available company pension products on the market using our comparison portal or you can also directly get in touch with our experts to understand if it can be a good option for you.
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