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How Monetary Policy and the Yield Curve Are Shaping Up in 2018

Robert Karr
How Monetary Policy and the Yield Curve Are Shaping Up in 2018

The Federal Reserve is expected to increase the Fed funds rate two more times in 2018. The yield curve is flattening, indicating a smaller difference between short-term and long-term interest rates. This has happened because the Fed has pushed for higher short-term rates with no major uptick in long-term rates. A flattening yield curve is a cause for concern, as it indicates weaker expectations from long-term equity and debt assets.