A Study On The Exit Of U.S. Quantitative Easing Monetary Policy

With the outbreak of the US financial crisis in2008, the world economy fellinto recession. In order to save the economy, the United States has launchedfour rounds of quantitative easing monetary policy to inject liquidity into themarket with extremely loose monetary policy. Within five years that thequantitative easing monetary policy was carried out, the US economy andfinance has been significantly improved. However, the quantitative easingmonetary policy, after all, is a means of temporary relief, and long-term use willgive a negative impact on the economy. It should exit at the appropriate time.In October2014, the US quantitative easing monetary policy officially quittedon the stage of history.Because of America’s superpower status in the world, to exit quantitativeeasing monetary policy would have a significant impact on the world economy.How to quit US quantitative easing monetary policy and what efficiencies it willmake are very important issues. To study the exit of quantitative easingmonetary policy, firstly we need to have a clear understanding of the theoryand practice of quantitative easing monetary policy. The theoretical basis ofquantitative easing monetary policy mainly concludes liquidity trap theory,non-neutral monetary theory and debt-deflation theory. The quantitativeeasing monetary policy, as a special loose monetary policy, is different fromthe traditional loose monetary policy in terms of policy objectives, policy toolsand conduction mechanisms. Four rounds of quantitative easing monetarypolicy implementation makes the US economy continues to rebound. Thefinancial markets and the real economy develop well, the unemployment rate declined, and the inflation rate is controlled within control. In an appropriatetime,the Fed chose to withdraw the quantitative easing monetary policy. Interms of the current policies being implemented, the United States chose aprudent and gradual way to withdraw quantitative easing monetary policy,which makes the exit process gradual and flexible. The Fed will use a varietyof tools to complete the exit process. The exit of quantitative easing monetarypolicy may cause fluctuations in the US domestic market short-term, but in thelong term it is in favor of the normalization of US economic and financialdevelopment. The exit procedure will also have an impact on the world. Weneed to pay close attention to the impact it may make on our economy. Theeffects are both positive and negative. For the positive impact, we must graspthe opportunity to develop our economy; for the negative impact, we need toimplement appropriate measures to deal with.Starting from the theoretical research of quantitative easing monetarypolicy, this paper firstly quantified the implementation of the four rounds ofmonetary policy to make an overview, and discussed the reasons for the exit ofUS quantitative easing monetary policy, tools and steps, the characteristicsand expected results. Besides, it discussed the impact it may have on ourcountry, and make recommendations accordingly.