What causes monetary inflation?

In the current monetary system, the federal reserve and commercial banks cause monetary inflation. The federal reserve increases the monetary base by purchasing assets through its open market actions. The commercial banks then create credit every time money is lent. This occurs due to the system of fractional reserve banking which I shall explain later. But total credit in the system has to be less than the reserve ratio (10) * monetary base.

Increase in monetary base is usually the first step in causing monetary inflation. But that money needs to be lent out to cause credit expansion. Credit expansion is what causes amplification of the monetary base. The federal reserve can further facilitate credit expansion by lowering interest rates that encourages borrowing. But it cannot force it. Credit expansion occurs through debt contracts between willing borrowers and commercial banks.

Also, there is not much difference between qualitative easing and quantitative easing. When fed lowers target interest rates, it may need to buy short term treasuries (qualitative easing) to maintain its target rate. This increases the monetary base. However, fed may also buy long term bonds or any other asset (quantitative easing) which also increases the monetary base. Thus, the process of qualitative easing and quantitative easing is essentially same.