Creating new note within a subdirectory

Hi all — am I doing something wrong… when I am in a subfolder and create a note through “[[ ]]” it creates it in the parent directory, which can be annoying. Is there some other context I need to give it so that it creates it in the subdirectory?

Not sure exactly where you want new notes to end up, could you check this setting of yours?

Thanks Silver. That solved it — it was set to “Vault folder”