<p>Fed rate is fixed by the Fed and Fed usually does not target bond yields you can read about that <a href="https://www.investopedia.com/articles/investing/101515/effect-fed-fund-rate-hikes-your-bond-portfolio.asp" rel="nofollow noreferrer">here</a>. So usually there won't be causality from yields to Fed rate, but in cases where Fed is concerned about bond yields and would like to actively respond to changes in them there would be causality from yields to funds rate.</p>

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2022-12-11T19:58:08.570Z
2022-12-11T20:07:30.383Z
2022-12-11T20:07:30.383Z
csilvia
<p>I understand that there is a strong causal effect between U.S. Fed rate hikes or decreases on U.S. bond yields.</p>
<p>But does the relationship also go the other way, e.g. U.S. Fed hikes/decreases in response to U.S. bond yield action?</p>

<monetary-policy><bonds><fed-funds-rate>
Do U.S. Fed Interest Rate hikes and bond yields have a causal effect on each other?
StatsScared
# Do U.S. Fed Interest Rate hikes and bond yields have a causal effect on each other?

(Asked by: username_0 on 2022-12-11)

I understand that there is a strong causal effect between U.S. Fed rate hikes or decreases on U.S. bond yields.

But does the relationship also go the other way, e.g. U.S. Fed hikes/decreases in response to U.S. bond yield action?

**Tags:** monetary-policy, bonds, fed-funds-rate

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## 1 answers

### Answer by username_1 on 2022-12-11. Score: 1

Fed rate is fixed by the Fed and Fed usually does not target bond yields you can read about that [here](https://www.investopedia.com/articles/investing/101515/effect-fed-fund-rate-hikes-your-bond-portfolio.asp). So usually there won't be causality from yields to Fed rate, but in cases where Fed is concerned about bond yields and would like to actively respond to changes in them there would be causality from yields to funds rate.


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