You're talking past each other, specifically on what it means to "set interest rates".
GP is correct in that the fed funds rate (the one that makes headlines and is used for policy) isn't literally _set_ by fiat: the Fed just intervenes in the interbank money market to ensure it stays in a specified range. It has near unlimited capacity to intervene so the fed funds rate only ever strays a tiny amount outside that range, and even then it's an exceptional circumstance.
On the other hand the parent is correct in that the Fed literally sets a lot of other rates that are used for financial plumbing.
Nickles I'm sure you know this already but I'm trying to clarify so that others don't get confused by an already confusing topic.
Thanks, the more clarification the better. There are so many moving parts, many of which aren’t understood well, that it can be very difficult to explain exactly how everything fits together.
I always recommend the book Floored! by George Selgin for those who want to understand current Fed policy. It’s a few years old at this point but does a fantastic job explaining things.
GP is correct in that the fed funds rate (the one that makes headlines and is used for policy) isn't literally _set_ by fiat: the Fed just intervenes in the interbank money market to ensure it stays in a specified range. It has near unlimited capacity to intervene so the fed funds rate only ever strays a tiny amount outside that range, and even then it's an exceptional circumstance.
On the other hand the parent is correct in that the Fed literally sets a lot of other rates that are used for financial plumbing.
Nickles I'm sure you know this already but I'm trying to clarify so that others don't get confused by an already confusing topic.