What is Yield Curve and why is it important?

A Yield Curve is a graphical representation of yields across different maturities (short-term to long-term) of government securities.

• Normal Yield Curve: Long-term yields > short-term
• Inverted Yield Curve: May signal recession
• Flat Yield Curve: Indicates uncertainty in economy

The RBI and market analysts use this to forecast economic conditions and interest rate expectations.