How do central banks respond to recession?

What actions do central banks take during a recession?

Central banks typically lower interest rates to stimulate borrowing and spending, and may implement quantitative easing.

What is quantitative easing?

Quantitative easing is a monetary policy where central banks purchase government securities to increase money supply and encourage lending.

Are there any risks associated with these actions?

Yes, risks include potential inflation, asset bubbles, and reduced effectiveness of monetary policy over time.

How do these measures affect the average consumer?

Lower interest rates can make loans cheaper, which may encourage spending and investment, benefiting consumers.

Can you give examples of central banks that have used these strategies?

Sure! The Federal Reserve in the U.S. and the European Central Bank have both used these strategies during past recessions.