St. Louis Fed, Report: Central Bank Balance Sheets and Policy Rate Decisions

“Given that central banks are tasked with maintaining price stability, we would expect to see policy rate increases in response to surging inflation, and in some cases, we have. However, the implementation of quantitative easing (QE) policy since the 2007-09 Great Recession may have complicated the decision to raise the policy rate in certain economies. Looking at the relative sizes of the balance sheets maintained by these economies’ central banks may help us understand why …”