The article mentions that the yield curve often flattens when the Fed raises short-term interest rates.

The article mentions that the yield curve often flattens when the Fed raises short-term interest rates.

Read the above article about the “yield curve” and discuss the following. The article mentions that the yield curve often flattens when the Fed raises short-term interest rates. Does that match what we know about liquidity premium theory? Assuming that the yield curve does flatten when the Fed raises short-term interest rates, should the Fed never raise short-term interest rates? What are the pros and cons of that policy?