In the second scenario, a sudden jump in interest rates, short-term and medium-term bond funds take an immediate hit in their value and then take about two years or more to climb back to their starting value.
In the first scenario of a steady, extended climb in rates, the firm found that investors would likely see the value of investments in mutual funds that hold short-term or medium-term bonds decline over a three-year period, while holders of stable-value accounts would see their balances continue to grow steadily.
"In the mediumterm, we need to look at ensuring the north has adequate funds for development so the communities there can build real livelihoods, " the official added.