"Our tree is actually a tree of the short-term interest rate. The average direction in which the short-term interest rate moves depends on the level of the rate. When the rate is very high, that direction is downward; when the rate is very low, it is upward"

This quote by John C. Hull is referring to the relationship between the short-term interest rate and the instructions of its motion. He is recommending that when the short-term rate of interest is high, the instructions of its movement is downward, and when the rate is low, the direction of its motion is up. This indicates that the level of the rate is an essential consider determining the direction of the short-term rate of interest. This quote is likewise suggesting that the short-term interest rate can be considered a tree, with the level of the rate being the trunk and the direction of its motion being the branches. This analogy is useful in understanding the relationship between the level of the rate and the instructions of its movement.