The outlook for future inflation influences the shape of the term structure of interest rates.

Name: The outlook for future inflation influences the shape of the term structure of interest rates.
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Question

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The term structure of interest rates, which plots the yields of similar quality bonds against their maturities, is influenced by expectations of future inflation. Higher expected inflation typically leads to higher interest rates for longer maturities, affecting the curve's shape.

The Outlook for Future Inflation Influences the Shape of the Term