What you have a problem understanding is called 'montary transmission mechanism'. You are thinking about it to directly. The theory basically says that the central bank offers lones above or below the natural interest rate in order to increase or decrease demand for base money increasing or decressing total spending (agregate demand) and thus the general price level.
The problem of conecting the economists theoretic definition of general price level is quite tricky to nail down. The commenly used CPI or even Core CPI does not perform very well.
Many economist would now argue that instread of focusing on CPI price level measure we should use either total spending directly, or use a different price level measure like the 'GDP deflator'.
What I did not talk about is that many prices are foreward looking, so prices start adjusting before demand if things are expected.
The problem of conecting the economists theoretic definition of general price level is quite tricky to nail down. The commenly used CPI or even Core CPI does not perform very well.
Many economist would now argue that instread of focusing on CPI price level measure we should use either total spending directly, or use a different price level measure like the 'GDP deflator'.
What I did not talk about is that many prices are foreward looking, so prices start adjusting before demand if things are expected.