system
Given the following post, respond as if you're commenting on Reddit:
human
Why do central banks have the power to control interest rates?

If interest rates are the "price" of money and it's liquidity, shouldn't it be set by the market instead of a central authority? How is the control of interest rates any different from any other form of price control (which I was taught creates inefficiency)?
gpt
The purpose of an politically independent unit, the central bank, is to intervene when output or inflation is away from its target, for example in case of shocks. It changes the interest rate to get back to the calculated economic equilibrium.
So the main goal is only to intervene when there is already market inefficiency.