> but IMO it'd be sensible to let the markets set the interest rate. The evidence that markets are weak at setting interest rates is itself quite flimsy. But t

> but IMO it'd be sensible to let the markets set the interest rate. The evidence that markets are weak at setting interest rates is itself quite flimsy. But that's what's happening (at least with the Fed, it's difference for ECB): the federal funds rate is actually a market rate! What the Fed does is that it sets two other rates that act as a ceiling (the discount rate) and a floor (the deposit rate) for the Federal funds rate. And then the Fed decides a target rate for the Federal funds market, that fits with their inflation target. If you remove the Fed out of the equation (just for this aspect of their intervention), the the Federal funds rate will move freely but then you have no guarantees that you'd have decent level of inflation…