Question

why policers are very much concerned about an inverted yield curve?

Answer 1

Mainly there are two types of interest rates and they are short term interest rate as well as long term interest rate.when we compare short term interest rates with long term interest rates then short term interest rates are more higher than the other one and this is what an inverted yield says.

The inverted yield curve is a kind of curve which shows that short term interest rate are much more or higher than long term interest rates. The yield curve is inverted and the invertions are made when a short term debt pays much more than long term debt.

For long term investment higher interest is given by the bank ( public or private bank) or to any other bank to which the investors deposits their money.

If the investors keeps the money with in the bank for long time or period then higher payouts are provided.