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Inflation-adjusted returns drop sharply on lower rates
Returns from government paper have dropped considerably since October 2024 with the Central Bank of Kenya (CBK) moving to normalise its policy rate by cutting its benchmark rate.
Inflation-adjusted returns from fixed income instruments have fallen sharply amid lower interest rates on most investment classes and slight pick-up in inflation.
The excess return above inflation on the 364-day Treasury bill narrowed to 5.6178 percent at last week’s auction compared to highs of 13.2399 percent in September 2024.
