viitekorkokäyrä

A viitekorkokäyrä, which translates to reference interest rate curve in English, is a graphical representation of interest rates for debt instruments of varying maturities, but with similar credit quality. It serves as a benchmark for pricing other debt securities and financial products. Typically, a viitekorkokäyrä plots the yields of government bonds or other highly-rated debt against their time to maturity.

The shape of the viitekorkokäyrä provides valuable insights into market expectations about future interest rates and economic conditions. A normal yield curve slopes upward, indicating that longer-term debt has higher interest rates than shorter-term debt. This reflects the expectation that interest rates will rise or that investors demand a premium for holding debt for longer periods due to increased risk. An inverted yield curve slopes downward, suggesting that short-term rates are higher than long-term rates, often signaling an expectation of falling interest rates and a potential economic slowdown. A flat yield curve indicates little difference between short-term and long-term rates.

Central banks often monitor and influence the viitekorkokäyrä as part of their monetary policy. Changes in the shape or level of the curve can impact borrowing costs for businesses and consumers, as well as investment decisions. Financial institutions use the viitekorkokäyrä to assess the profitability of their lending and borrowing activities and to manage their interest rate risk. It is a fundamental tool in finance for understanding market sentiment and setting prices for a wide range of financial instruments.