The link between central bank assets and interest rates

The central bank's balance sheet and interest rates are two sides of the same coin. To translate monetary policy, you must understand how the modern banking system works.

"Fat cat banker", created by DALL∙E 2

When you send money to a friend, your bank sends it from your account to hers. The numbers in your account go down by the same amount hers goes up.

If you and your friend use the same bank, the transfer is simple: one account to the other. But if you use different banks, your bank will send the money to your mate's ba…