I disagree that the market is setting interest rates; it's merely tinkering around the edges of Bernanke's next-to-zero funds rate as is the plan. There is no longer any substantial connection between the pool of loanable funds [people's savings] and the demand for loans.
We have a centrally planned economy by interest rate manipulation. If the government were controlling, say, gasoline prices similarly there would be riots. But, of course, even Bernanke can't make gasoline out of the proverbial thin air.
The Taylor Rule is named for John B. Taylor, the Mary and Robert Raymond Professor of Economics at Stanford University and George P. Shultz Senior Fellow in Economics at Stanford’s Hoover Institution. He is well-regarded in conservative and libertarian circles.
In 2011, in the Cato Journal article, "Legislating a Rule for Monetary Policy," Prof. Taylor laid out the reason for such a rule:
"The objective, as Milton Friedman said many years ago, is to find a way of 'legislating rules for the conduct of monetary policy that will have the effect of enabling the public to exercise control over monetary policy through its political authorities, while at the same time it will prevent monetary policy from being subject to the day-by-day whim of political authorities.'”
Perhaps you see a better alternative. I do not, except for a conservative, free market President and Congress and further refinement by the Fed of its implementation of the Taylor Rule and similar policies that increase the general level of prosperity.