Rate Reduction

Of late, long-term (10-year) interest rates have fallen quite dramatically, by about two-thirds of a percentage point. However, short-term (2-year) rates have fallen by only half as much. Thus, the yield curve inversion, an accurate recession indicator, has gotten worse. This implies that the Fed will keep short term rates high for now to quash inflation before lowering them as the impending recession makes itself increasingly felt in latter 2023.