Lately, under the intense competition put up by the local banks due to significant improvement in their processes, foreign banks have been on the retreat even in the areas where they used to enjoy virtual monopoly.
If the central bank’s policy is in danger of erring on the side of being too loose, the slope of the curve could become abnormally steep. Long bond yields could rise even as short-term interest rates are falling. But an abnormally steep yield curve is not necessarily conclusive evidence of loose monetary policy.