Central banks work hard to balance interest rates and the health of the economy. Here’s a simple breakdown of how they do it:

1. Interest Rates:

   • They raise rates to fight inflation, which means keeping prices from going too high.
   • They lower rates to help people spend more when the economy is struggling.

2. Economic Indicators:

   • They keep an eye on things like unemployment and how fast the economy is growing. This helps them make the right decisions.

3. Forward Guidance:

   • They share information about what they might do in the future. This helps people know what to expect and plan accordingly.

Finding the right balance is really hard but super important for keeping the economy stable!