Understanding Yield Curve Interpretations

In the context of fixed income securities, understanding the term structure of interest rates is essential for valuation. The yield curve, which depicts the relationship between interest rates and different maturities, can take various shapes: normal, inverted, or flat. Each shape provides insights into future economic expectations and inflation.

Consider a scenario where the yield curve is steeply upward sloping. This typically indicates that investors expect higher interest rates in the future due to anticipated inflation or economic growth. If a financial analyst observes this shape of the yield curve, which of the following conclusions is likely most accurate?