Nick apparently conflates monetary policy with monetary operations. No one doubts or denies that the cb sets its target rate and changes it as deemed appropriate with a view to monetary policy, and in the US, the Fed's mandate is to maintain production consistent with full employment and price stability. So the Fed does have explicit economic criteria for setting monetary policy.
If this is what one means in holding that monetary policy is "endogenous," OK. But that is using "endogenous" in a different sense than Post Keynesians use it. Post Keynesians hold that the interest rate is exogenous in that it is set by the central bank as monopoly supplier of reserves rather than as a market rate. Of course, change in the economy influence changes in the rate. But what adjustment in the rate actually do and how they do it is non-trivial, and there is apparently considerable disagreement over this.
Regardless of the monetary policy it chooses to implement, the cb uses monetary operations as tools. These are the means of implementing monetary policy to achieve policy goals. The principal tool is price — the overnight interest rate. The cb sets price and lets quantity float within the band that achieves this price while settling all accounts seamlessly. That is how a monopolist acts, and the cb holds a monopoly over reserves and access to them since it owns and controls the spreadsheet only which they alone reside.
The cb conducts monetary policy by setting the target rate exogenously, although obviously not arbitrarily. No one ever claimed that. The target rate changes with economic conditions, and many factors may be involved in establishing such conditions. Central banks maintain elaborate forecasting models for this purpose.
The cb uses monetary operations to implement monetary policy. Chief among these operations is setting the overnight rate and managing reserve quantity to hit its target through OMO. That is to say, if the cb permits reserve quantity to expand without limit, then the overnight rate will go to zero. So the cb has to limit quantity available in order to hit the target, since insufficient reserves will drive up the rate and excess reserves will drive it down.
Issuance of government securities is also an interest rate management operation in that this alters the composition and term of government liabilities, draining excess reserves to reduce the need for OMO intervention.
If it chose, the cb could simply pay IOR at the target and then excess reserves would become irrelevant. Or government could eschew monetary policy in favor of fiscal policy and set the overnight rate to zero.
"Monetary policy is just one damn interest rate after another"
by Nick Rowe
There are always interesting comments at Nick's place and he is good at responding to them.