This is one that I don't know as much about as far as what controls them outside of the federal reserve. I know the reserve can loose control of rates if they are not careful as was seen in the Jimmy carter years. The set rates and LIBOR rates which is the interest rates the banks borrow money from the federal reserve and then add their own interest rates hike to make a profit lending money to the public. If the libor rate goes up, they just pass the increase on to the consumer. The banks can also raise rates as high as they want to over the libor rate but competition keeps them in check on that. Like I said before, there are other entities at control of interest rates besides the federal reserve that can make the fed loose control. The feds job is to keep rates low but also battle inflation. If commodity prices start rising faster than income levels, it can be dangerous. They don't like see commodity go up year over year by over 2% on average. To keep up under investment gains. If inflation starts going up to say 5% on all commodities in general, They can raise the interest rates by a couple percent, drive the dollar up and sink the commodity prices back down to a level more acceptable. They can't just kill the inflation though as that is how commodity producers stay ahead of their own input inflation. Its a balancing act and one I would not want to do.CF