What is the Yield Curve implying?
The below graph plots the Implied Forward Interest Rate yield curve (blue line) which is derived from the Interest Rate Swap yield curve (red line) as at 29 October 2019.
Any changes to today's yield curve will also change the implied forward interest rates and market expectations of future Reserve Bank changes to official interest rates.
The implied forward rates are interpreted as follows –
(i) Short term – likely interest rates will be steady until circa October 2020.
(ii) Medium Term – likely interest rates will be steady to slightly higher until March 2021 and then will begin increasing.
(iii) Long Term – likely interest rates rise will accelerate from March 2022.
