Inflated Yield Curve

The inflated yield curve is a graphical representation showing the relationship between interest rates and the maturity of debt instruments, such as bonds. When the yield curve is inflated, long-term interest rates are significantly higher than short-term rates. This can indicate investor expectations of rising inflation, economic growth, or increasing risk over time. In practical terms, it suggests that investors require more compensation (higher yields) for lending their money for a longer period, reflecting uncertainty about future economic conditions. This phenomenon can influence borrowing costs and investment decisions in the broader economy.