The Bank of England recently caught the entire investing world by surprise when it decided to deviate from the more restrictive policy that central banks all over the world are employing to combat surging inflation, and returned to quantitative easing (QE).

QE is when a central bank buys bonds, typically in the form of government-backed debt or mortgage-backed securities. In doing so, a central bank is increasing a country's money supply and effectively pumping money into the economy, which creates more liquidity. This "easy-money" policy, which has been used by central banks since the Great Recession, is typically done to stimulate an economy when interest rates are already extremely low.

It's also seen as generally supportive of the stock market because more money in the economy can lead to more assets being inflated. With the Bank of England doing a quick pivot on monetary policy, is it only a matter of time before the Fed follows suit? Let's take a look.

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Source Fool.com