The below graph plots the Implied Forward Interest Rate yield curve (blue line), and the Interest Rate Swap yield curve (red line).
The yield curve is interpreted as follows –
(i) Short Term (less than 6 months) – the Reserve Bank to cut the official interest rate by 0.25%.
(ii) Medium Term (12 months) – interest rates to be steady.
(iii) Long Term (3 years) – interest rates to rise by 1% to 2.25% than to keep on increasing to 2.75%.
