Quantitative easing is the central bank's nuclear option — printing money to stimulate a struggling economy. When interest rates are already near zero and the economy is still weak, the central bank buys massive amounts of government bonds and other securities from the market. This floods the financial system with cash, pushing interest rates lower and encouraging lending and investment.
The US Federal Reserve launched four rounds of QE between 2008-2020, buying over $8 trillion in assets. The ECB, Bank of Japan, and Bank of England all implemented their own QE programs. Japan has been doing QE since 2001 — the Bank of Japan now owns over 50% of all Japanese government bonds.
Critics argue QE inflates asset prices (stocks, real estate) while doing little for the real economy — benefiting Wall Street over Main Street. The post-COVID inflation surge (reaching 9.1% in the US) was partly blamed on excessive QE. The reverse — quantitative tightening (QT) — is when central banks sell bonds to drain liquidity from the system.