# Why Central Banks Are Watching the Yield Curve Slope

Page: https://stenobird.com/podcast/monetary-policy-explained-with-fexingo-central-banks-money-supply-and-interest-rates-7872013/why-central-banks-are-watching-the-yield-curve-slope
Text version: https://stenobird.com/podcast/monetary-policy-explained-with-fexingo-central-banks-money-supply-and-interest-rates-7872013/why-central-banks-are-watching-the-yield-curve-slope.md
Podcast: [Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates](https://stenobird.com/podcast/monetary-policy-explained-with-fexingo-central-banks-money-supply-and-interest-rates-7872013)
Published: 2026-06-30T07:36:55+00:00
Episode link: https://audio.fexingo.com/business/monetary-policy-explained/episode-0082.mp3
Audio file: https://audio.fexingo.com/business/monetary-policy-explained/episode-0082.mp3
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Duration seconds: 578

## Resource

Episode 82 of Monetary Policy Explained: Central Banks, Money Supply, and Interest Rates. Lucas and Luna dig into the yield curve slope—the gap between short-term and long-term bond yields—and why it has become a hotter topic than the curve's absolute level. They walk through the mechanics: how a flattening slope can signal tighter financial conditions even when the central bank hasn't moved, and why the slope inversion in 2023-2024 was a false alarm on recession. They also discuss a 2025 paper from the Bank for International Settlements that proposed a 'slope rule' for monetary policy, and whether the European Central Bank has been implicitly using it. Specific numbers: the spread between 2-year and 10-year German Bunds narrowing from 150 basis points in January 2025 to just 45 basis points by June 2026. One concrete takeaway: listeners will understand why the slope matters more than the level for predicting central bank moves, and how the slope rule could complement the Taylor Rule. #YieldCurve #CentralBanks #MonetaryPolicy #BondMarkets #BIS #EuropeanCentralBank #SlopeRule #InterestRates #LucasAndLuna #FexingoBusiness #BusinessPodcast #EconomicsPodcast #Macroeconomics #FinancialMarkets #BundSpreads #Steepening #Flattening #RecessionSignals Keep every episode free: buymeacoffee.com/fexingo

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