It is such a bad idea for a central bank to invert the yield curve. If central bankers can do only one thing, that is probably the thing they should know: Glenn D. Rudebusch and John C. Williams: Forecasting Recessions: The Puzzle of the Enduring Power of the Yield Curve: "For over two decades, researchers have provided evidence that the yield curve... contains useful information for signaling future recessions.... Professional forecasters appear worse at predicting recessions a few quarters ahead than a simple real-time forecasting model that is based on the yield spread...
#shouldread #monetarypolicy
