Kenyan investors are increasingly favouring 91-day Treasury bills as renewed inflationary pressures raise uncertainty about the direction of interest rates. The preference for shorter-term government securities reflects growing demand for flexibility, allowing investors to reinvest their funds sooner if yields rise.The 91-day Treasury bill attracted bids worth KSh49.7 billion and KSh50.2 billion in the two preceding auctions, exceeding demand for the longer-dated 182-day and 364-day instruments. The trend highlights investors’ cautious approach amid rising fuel prices and concerns about the cost of living.The Central Bank of Kenya’s auction results dated 19 October 2026 show that the 91-day Treasury bill recorded an average interest rate of 8.75%, down slightly from 8.7615% in the previous auction on 12 October. The 182-day Treasury bill averaged 8.86%, while the 364-day instrument recorded approximately 9.04%.
Despite inflation concerns, short-term Treasury bill yields have continued to ease. The difference between the 91-day and 364-day rates remains relatively narrow, potentially making the shorter-term option attractive to investors who prioritise flexibility over locking their funds away for longer.The Central Bank scheduled another Treasury bill auction for 22 October, with a value date of 26 October. The results of this auction will provide further insight into investor demand and the direction of yields.Kenya’s annual inflation rate increased to 6.8% in September 2026, from 6.6% in August. Rising fuel prices, transport expenses and food costs have contributed to renewed concerns about inflation.
Higher inflation can influence monetary policy decisions by reducing purchasing power and increasing pressure on the Central Bank to maintain or tighten its policy stance. Market analysts have raised the possibility of a rate increase in December if inflationary pressures persist.The Central Bank of Kenya retained its benchmark rate at 8.75% in October, signalling a cautious approach as policymakers monitor economic developments.
Treasury bills offer investors an opportunity to lend money to the government over periods of 91, 182 or 364 days. They are commonly used for short-term financial planning because they have defined maturity periods and provide returns linked to prevailing auction rates.However, investors should distinguish between the quoted annualised rate and the actual return earned over a 91-day investment period. They should also consider applicable taxes, investment costs and inflation when evaluating potential returns.The growing preference for shorter-dated securities highlights the importance of balancing returns, liquidity and investment timelines. While the 91-day Treasury bill provides an opportunity to reinvest funds sooner, future auction rates remain uncertain.As Kenya’s inflation outlook evolves, investors will continue monitoring Treasury bill yields, fuel prices and monetary policy decisions to guide their investment choices.
