Asymmetric Impacts of Inflation on the US Bond Rates and FED’s Pre-Emptive Policy

  • İsmet Göçer Department of Econometrics, Aydın Adnan Menderes University, Turkey
  • Serdar Ongan Department of Economics, St. Mary's College of Maryland, United States
Keywords: Fisher Effect, Nonlinear and Linear ARDL Models, The FED, Preemptive Strike


This study investigates the asymmetric impacts of changes in inflation rates on the US bond rates. This investigation is constructed on the Fisher Equation. To this end, the nonlinear ARDL model is applied. Empirical findings indicate that only the decreases (πt-) in inflation rates affect bond rates. This asymmetric impact therefore shapes the FED’s monetary policy in terms of determining the bond rates at lower cost. When the inflation rate rises, the FED will know (in advance) that they do not need to increase the bond rates. This reminds us the FED’s former pre-emptive strike policy against inflation.


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How to Cite
Göçer, İsmet, & Ongan, S. (2020). Asymmetric Impacts of Inflation on the US Bond Rates and FED’s Pre-Emptive Policy. Econometric Research in Finance, 5(2), 143 - 157.
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