Global Economy

US: The Federal Reserve held interest rates steady at 4.25% to 4.50% for the third straight meeting in May 2025, matching market expectations as officials maintained a cautious stance amid growing uncertainty. With President Trump’s new tariffs threatening to push inflation higher while also weighing on growth, the Fed signaled a wait and see approach. Policymakers acknowledged heightened risks on both sides, rising inflation and rising unemployment, and noted that the economic outlook has become more uncertain. During his press conference, Fed Chair Jerome Powell emphasized that it is too early to tell which risk will dominate and stressed the central bank’s ability to remain patient while assessing new data. Despite volatility from swings in net exports, the Fed said recent indicators suggest the economy is still expanding at a solid pace.

OPEC: OPEC’s oil output slipped slightly in April despite the group’s decision to begin easing production cuts, according to a Reuters survey. Total production fell by 30,000 barrels per day (bpd) to 26.60 million bpd, driven mainly by a sharp decline in Venezuelan supply as the United States ramped up efforts to curb the country’s oil exports. Smaller drops in output were also recorded in Iraq and Libya. The decrease came even as Iran raised production, delivering OPEC’s largest output hike last month, largely unaffected by renewed US sanctions. Notably, top producers like Saudi Arabia, the UAE, and Kuwait showed little change in output, despite increased quotas under the new OPEC+ agreement. The group plans to accelerate production hikes in May and June, citing low global inventories as a supportive factor. However, the full scale of these increases remains uncertain given ongoing US pressure on Venezuela and Iran.

Sub-Saharan African Economies

Rwanda: Rwanda’s annual inflation accelerated to 6.6% in April 2025 from 4.9% in March, driven by sharp increases in food prices—particularly meat, dairy, and eggs. This marks the highest rate since November 2023. Month-on-month, consumer prices rose 2.3%, the steepest increase in over a year.

Egypt: Egypt’s annual urban inflation rose to 13.9% in April 2025 from 13.6% in March, driven by higher costs for housing, transport, and leisure. While some categories like food and clothing saw slower price growth, the overall rate marked the fastest rise since January. Monthly inflation eased to 1.3%, the smallest uptick in four months.

Ghana: Ghana’s annual inflation slowed for the fourth straight month to 21.2% in April 2025, an eight-month low, driven by a stronger cedi and softer increases in both food and non-food prices. Monthly inflation rose by 0.8%.

Domestic Economy

Major updates during the week:

  • Nigeria has cleared its $3.4bn COVID-19 loan from the IMF, exiting the lender’s debt list, but rising borrowings, including a new $215m World Bank loan, and external shocks could pressure the country’s debt profile and economic outlook in 2025.
  • The Senate has passed four major tax reform bills, retaining VAT at 7.5% while introducing lower PAYE, VAT exemptions on essentials, and SME tax reliefs.
  • Nigeria and Brazil have revived their stalled Bilateral Air Service Agreement (BASA), forming a technical working group to finalize the deal, which is expected to pave the way for direct flights and deepen trade, tourism, and cultural ties between Africa and South America.

Nigerian equity market: NGX sustains bullish momentum despite Friday’s profit-taking

Despite Friday’s bout of profit-taking that briefly interrupted a week-long rally, the Nigerian equities market closed in positive territory, buoyed by resilient investor sentiment and strong Q1’25 earnings. The NGX ASI advanced 2.54% week-on-week, settling at 108,733.40 points, with market capitalisation rising to ₦68.34 trillion. This gain came despite Tuesday’s trading suspension on Golden Guinea Breweries, highlighting the market’s overall bullish momentum. Investor appetite remained strong, as 68 equities appreciated while 28 declined, reinforcing widespread optimism. Top performers included BETAGLASS (+46.31%), SAHCO (+30.11%), CADBURY (+22.26%), MTNN (+11.73%), and GTCO (+7.89%), overshadowing losses in VFD (-10.61%) and TRANSPOWER (-9.98%). On a sectoral basis, all five major indices closed higher, led by Oil & Gas, which posted a 3.98% WoW gain, reflecting broad-based strength across the bourse.

Nigerian fixed-income market: DMO issues ₦598 billion treasury bills at the primary market auction.

The Debt Management Office adopted a more cautious approach at this week’s primary market auction, offering approximately ₦598 billion despite total bids exceeding ₦1 trillion. As a result, stop rates for the 91-day and 182-day tenors were maintained at 18.00% and 18.50%, respectively, while the newly issued 1-year bill saw a marginal increase of 3bps to 19.63%. In the secondary market, demand from unsuccessful bidders spilled over, driving the average yield down by 21bps (WoW) to 20.87%. Meanwhile, the bond market remained relatively bearish as investors continued to digest recent economic data. In the Eurobond segment, Nigeria’s sovereign papers experienced some recovery, with average yields falling by 24bps to 10.39%, supported by slight improvements in the global environment.