Do the Federal Reserve and the ECB obey the financial markets?

A number of market economists believe that the Federal Reserve and the ECB have no other choice but to conduct the monetary policy that financial markets expect from them , i.e. rate cuts and resumption of quantitative easing even if the macroeconomic situation in the United States and the euro zone does not justify it . The idea is that if central banks do not do what financial markets expect, long-term interest rates will raise sharply , the exchange rate will appreciate and share prices will fall , which central banks cannot accept and would be too dangerous for growth. We therefore seek to determine whether, in the past, we see that financial markets’ expectations for short-term interest rates have an impact on central banks’ choices: do they react to the market s ’ expectations? Econometric analysis shows that 1-year and 2-year interest rate s in 1 year, lagged by 2 months to avoid simultaneity, have a significant positive impact on the Fed funds rate in the United States and the repo rate in the euro zone. It therefore seems that central banks "obey" financial markets.