Yesterday, the Federal Reserve released the minutes of the minutes of their last meeting that took place on September 19 & 20. The financial media makes a big deal out of Fed statements and for good reason. They control the supply of money and credit along with their member banks. Many financial journalists and asset managers sit on the edge of their seat wondering if and when the Fed will raise or lower the overnight Fed Funds rate. This is the rate banks charge when they lend to each other. The theory on how short-term interest rates interact and influence long-term rates was developed by Sir John Richard Hicks in his book "Value and Capital" published all the way back in 1939.
Historically, the Fed only influenced short-term interest rates through the purchase and sale of US Treasury Bills. If the Fed wants rates to rise, they would sell T-Bills, if they want short-term rates to fall they buy T-Bills. Quantitative easing is a way the Fed influences long-term rates.