Abstract: A theoretical discussion on central-bank effects on interest rates forms the substance of this chapter. It focuses on the actions that effect interest rates in the short term. This is at odds with much of the theoretical literature on this subject that opts for a more long-term approach. It discusses equilibrium models of interest rates and presents two sections discussing both classical and multiplier adjustments, and the effects of long-term future expectations on rates in the short term.

Keywords: central bank, equilibrium theory, interest rate, multiplier adjustments,