The recent flattening yield curve is not a signal that the nine-year-long U.S. economic expansion is approaching its end, said Federal Reserve Gov. Randal Quarles on Wednesday. "I'm not viewing the current flattening of the yield curve as a particular signal towards a pending recession," Quarles said, during a speech at the Bretton Woods Conference. Yields are rising more for shorter maturities than for longer maturities, flattening the yield curve. The yield on the two-year note which is more sensitive to Fed expectations, was at 1.73% in recent action. The 10-year bond yield now stands at 2.868. Some Fed officials believe an inversion, where short-term rates rise above long-term rates, is an important signal of a severe downturn. But Quarles said it all depends on "what was driving" the narrowing of the premium. "I think the flattening of the yield curve we are seeing now is more a result of expected lags in the adjustment of the longer-term rates once shorter-term rates start to rise. If that is what is driving things going forward I don't think it is as likely that the inversion of the yield curve is...sort of an indicator of a recession to come," he said.