It is often argued that the central bank sets the short-run interest rates but the private market demand and supply sets the long-term interest rate. This is particularly important in the current debate that bond markets will close a government down if it senses the deficit is too large. However the reality is that the central bank can control interest rates at all yields by issuing debt at different maturities on a fixed yield basis. The only reason that private market forces have any influence is because the government voluntarily constrains itself to issue debt $-for-$ on an auction basis to match net spending.
Answer: True
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