Inflation and Higher Rates: What They Mean for Infrastructure
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Key Takeaways Energy-driven inflation and geopolitical risk increase the likelihood of higher-for-longer interest rates. Many infrastructure cash flows have built-in inflation pass-through, which can help protect real returns over the medium to long term. Inflation sensitivity varies by asset type: regulated utilities tend to adjust returns over time as regulators reset allowed returns, while user-pays and contracted assets depend more on concession terms, contract escalators and demand exposure. The escalating conflict in the Middle East has increased the risk of energy-driven inflation…
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