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May I know the reason of why interest rate decrease earlier than it thought will caused the interest yield curve to be flatten instead of increase or steepen ?
I am not sure I understand what you are asking.
The yield curve normally slopes upwards because usually the interest rate is usually higher the longer the period of the loan or deposit. The higher the interest rates are for longer periods then the steeper the curve will be, and the lower the interest rates are for longer period then the less steep the curve.
i founded this question in BPP revision kit.
“which causes the interest yield curve to be steepen?
1. increased uncertainty about the future
2. Hightened expectations of the increase in interest rate
3. The expectation of decreses in interest rate happen earlier than previously thought. “
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