What is Quantitative Tightening?

Quantitative Tightening is when the bank slows down giving out money to help keep prices from getting too high.

Imagine you have a piggy bank full of coins, and every time you want something, you take coins from it. That’s like how banks give out money to people and businesses, they're using their piggy bank (which is called the central bank) to help things run smoothly.

Sometimes, prices go up because there's too much money going around, like when everyone in class gets extra candy, and suddenly, the store runs out. The bank notices this and decides to slow down giving out coins from its piggy bank. This is Quantitative Tightening.

Think of it like a faucet. When prices are too high, the bank turns the faucet down, letting less money flow into the economy. This helps slow things down and makes prices more stable again, just like how turning off the faucet stops water from spilling over.