In a report by the BBC, it emerged that the Bank of England suggested some banks to lower the Libor, around 2008. The Libor is normally set by commercial banks, and it is directly affecting mortgages and lending rates (more info here). As the BBC Radio 4 commentator said this morning, it is the "rate that really matters". However, the news is presented as a breach of authority, as it is not the competence of the BoE to manipulate the Libor. And yet, the BoE wants to affect short term interest rates to affect commercial lending! All this is a bit odd.
If this rate is so important, why is it not the Libor the key tool of monetary policy of the Bank of England? Why to bother with an "imperfect" tool like the rate of short term gov. bonds, and not set the Libor, for the whole range of maturities (as banks do), directly?