Yield Curve

A graph showing the relationship between bond interest rates (y-axis) and the time to maturity.  The curve will take different shapes depending on anticipated future interest rates.  The curve is monitored closely as people try to predict changes in economic growth from the curve.  A steep yield curve indicates the anticipation of high interest rates.  Some believe it presages inflation.  A flat yield curve shows that long term interest rates are almost the same as short term interest rates, indicating the absence of inflationary expectations.

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