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In 2006, an ECB report stated that despite an overall increase in euro area long term bond yields, the euro area yield curve flattened during the year

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In 2006, an ECB report stated that despite an overall increase in euro area long term bond yields, the euro area yield curve flattened during the year. This is mirrored in the decline of the “term spread,” which is measured by the difference between the yield on a ten-year government bond and a three month EURIBOR. During 2006, there was almost a 50 basis point decline in the term spread, reaching to almost 30 basis points by the end of the year. Typically, long-term interest rates are above short-term rates. In terms of the Fisher effect, what would that pattern say about expected inflation and/or the expected future real interest rate?