Question

How does credit easing alter the outlook for the economy and inflation?

Answer 1

Credit easing occurs when the fed buys private securities like company bonds and also buys treasury bills . It increases the liquidity in the economy. This increases the demand , stabilizes share price and reduces price volatility. This also helps in recovery after recession by increasing demand.
It increases inflation in the long run because it will increase aggregate demand . Since more liquidity is injected ion the banks they can provide more loans stimulating demand and increasing inflation further.