Why Money Market Rates are Falling – What to Do Now
In recent months, you may have noticed that your Money Market Fund rate has dropped from 21%–24% to approximately 16%–18%. This is a noticeable shift and it’s only natural to have questions.
A decline in rates doesn’t mean something is wrong. Instead, it signals a shift in broader economic conditions (such as inflation) and presents new investment opportunities.
What’s Behind the Decline in Rates?
When you invest in a Money Market Fund, the fund manager puts your money into short-term fixed-income securities like Treasury Bills, Commercial Papers, and other low-risk assets. The interest earned from these investments is what you receive as returns. When inflation is low, the interest rates on these fixed-income securities also drop. That’s why the returns on your Money Market Fund may reduce as well.
When inflation was high—close to 30%—the Central Bank raised interest rates to encourage saving and slow down spending (when inflation is high, the government wants people to spend less and save more so that prices can stabilize and the economy can return to balance).
As a result, yields on Treasury Bills and similar instruments rose above 25%, allowing the Money Market Fund to offer very attractive returns.
However, inflation has begun to ease. During this phase, the Central Bank often reduces interest rates to encourage borrowing and spending. Lower interest rates make it more affordable for businesses to borrow, expand, and create jobs, which helps stimulate the economy.
But as interest rates fall, the yields on fixed-income securities also decrease, resulting in lower returns on the Money Market Fund.
So while your investment now earns a bit less,
it is also preserving more value because everyday prices aren’t climbing as sharply.
What This Means for You
Falling Money Market rates are not a sign of poor performance. They are part of a natural economic adjustment. And historically, periods of lower interest rates tend to benefit the stock market.
When borrowing becomes cheaper, companies can expand, innovate, and grow profits. This often translates into:
- Higher share prices
- Better dividends
- Improved long-term wealth opportunities for investors
This is why forward-thinking investors may begin shifting a portion of their portfolio into stocks when money market yields soften.
You Can Balance Stability and Growth
A proactive investor combines the stability of a Money Market Fund with the growth potential of stocks. This type of diversification helps you stay prepared for different market cycles, not just the one we’re experiencing today.
If you’re looking for a strategic way to diversify, consider the Coronation Balanced Fund. It is designed to deliver long-term growth by investing in a mix of strong-performing stocks and reliable fixed-income securities.
A Quick Look at the Numbers
Take a look at these snapshots of our mutual funds’ weekly performance between **31 October 2025 and 11 November 2025. This comparison is provided for educational purposes, to illustrate the recent decline in money market rates and the stronger performance of stocks, as reflected in the Balanced Fund.
Ready to unlock the power of Stocks through the Coronation Balanced Fund? Here’s how to get started:
- Download the Coronation Wealth Plus App on Android or iOS and invest
- Or invest via the AccessMore App on Android or iOS, if you’re an Access Bank customer.
**Please note that past performance does not guarantee future results. If you are unsure about the next step, we encourage you to speak with us before making any investment choices.
