The effect of the Christchurch earthquake has even rattled mortgage rates heralding a turning point to the current trend of a flattening yield curve with floating and short-term rates increasing and long-term fixed rates falling.
Expect from here on to see the graph in front of you flipped, as economists expect the yield curve to steepen. The reason for this is that the 7.1 magnitude earthquake that hit Canterbury and the collapse of South Canterbury Finance last week has eliminated any remaining chance of a September Official Cash Rate (OCR) hike according to economists. Most are now not expecting monetary policy tightening until 2011.
