Global Economy

US: The U.S. Federal Reserve on Wednesday cut interest rates by 25 basis points to a range of 4.00%–4.25%, its first reduction since December, citing growing concerns about labor market weakness. Chair Jerome Powell signaled that further cuts are likely at the October and December meetings, noting slowing job creation, rising unemployment among minorities and younger workers, and shorter workweeks. While the move partially aligns with President Trump’s calls for looser policy, it fell short of the 50-basis-point cut favored by new Fed Governor Stephen Miran, who dissented. Powell emphasized the Fed’s independence and commitment to its dual mandate, pointing out that inflation remains projected at 3% (above the 2% target) yet risks to employment are becoming more pressing. Policymakers revised growth slightly higher to 1.6% while keeping unemployment expectations at 4.5%.

Sub-Saharan African Economies

Euro Area: Euro area consumer price inflation eased to 2.0% in August 2025, slightly below the earlier estimate of 2.1%, as energy costs declined more sharply than initially expected. This marks the third consecutive month that inflation has aligned with the European Central Bank’s 2% target, strengthening expectations that monetary policy will remain steady in the near term. Inflation trends across categories were mixed as unprocessed food inflation edged up to 5.5% from 5.4% in July, while energy prices fell 2.0% after a 2.4% decline in the prior month. Services inflation eased slightly to 3.1% from 3.2%, and processed food, alcohol, and tobacco prices rose 2.6%, down from 2.7%. Meanwhile, non-energy industrial goods inflation was unchanged at 0.8%. Core inflation (which excludes food, energy, alcohol, and tobacco) remained stable at 2.3%, its lowest level since January 2022.

Nigeria: Nigeria’s annual inflation rate eased for the fifth month to 20.12% in August 2025, marking the softest reading since July 2022, mainly supported by foreign exchange stability and the harvest season, alongside base effects linked to the base year change early this year. Food inflation, the largest component of the inflation basket, decelerated to 21.87% in August, from 22.74% previously. The core inflation rate, slowed to 20.3%, down from 21.3% in July. On a monthly basis, the CPI rose by 0.70% in August, slowing from 1.99% in the prior month.

Ghana: The Bank of Ghana cut its benchmark  policy rate by 350 bps to 21.5%, citing sustained disinflation, robust growth, and stronger external buffers. Headline inflation fell to 11.5% in August, the lowest level in four years. Economic activity remained strong, with real GDP expanding 6.3% in Q2 2025 and non-oil GDP rising 7.8%, supported by solid gains in agriculture and services. The external sector continued to strengthen, with a provisional trade surplus of $6.2 billion and gross international reserves of $10.7 billion by the end of August, equivalent to 4.5 months of import cover. Despite potential risks from utility tariff adjustments, the central bank noted broadly anchored inflation expectations, improved external buffers, and growing domestic confidence, reaffirming its commitment to supporting the recovery without undermining recent gains.

Domestic Economy

Major updates during the week:

  • Nigeria’s inflation eased for the fifth straight month in August to 20.12% y/y, driven by slower food and core price growth, FX stability, and refinery gains, but analysts expect the CBN to hold rates at next week’s MPC meeting to consolidate FX market stability.
  • Nigeria’s total foreign trade rose to ₦38.04trn in Q1 2025, driven by higher exports at ₦22.75trn and slightly lower imports at ₦15.29trn.
  • FAAC disbursed ₦2.2trn to the Federal, State, and Local Governments in August 2025, up 11.2% from July, driven by subsidy removal, stronger oil and non-oil earnings, and FX gains.

Nigerian equity market: Bullish momentum holds firm despite banking sector drag

The Nigerian equities market sustained its bullish run for the second consecutive week, supported by strong gains in the Consumer Goods, Oil & Gas, and Industrial Goods sectors. The NGX All-Share Index rose 0.92% to close at 141,845.34 points, while market capitalisation advanced to N89.74trn from N88.92trn the previous week. Market breadth was mixed, with forty equities gaining, led by GUINNESS (+28.60%), EUNISELL (+20.28%), and UNILEVER (+8.71%), while forty-one stocks recorded losses, including UBA (-9.24%), NGXGROUP (-8.40%), and WEMABANK (-6.38%). Sectoral performance reflected this divergence, with Consumer Goods up 5.48% WoW, while Insurance led the laggards with a 4.67% WoW decline.

Nigerian fixed-income market: DMO issues new 1-year at 16.78%, down 91bps from last auction

The Nigerian fixed-income market closed largely positive this week, supported by the softer inflation print, ample system liquidity, expectations of a rate cut, and limited supply at the primary market. At the NTB auction, the DMO raised ₦345 billion (above the ₦290 billion offered and below the ₦1.5 trillion bided) across three maturities at reduced stop rates. Yields on the 91-, 182-, and 364-day instruments declined by 32bps, 20bps, and 91bps, settling at 15.00%, 15.30%, and 16.78%, respectively. This momentum filtered into the secondary market, as unsuccessful bids drove further activity. The treasury bills market eased by 32bps to 18.46%, while bond yields dipped 6bps to 16.61%. Conversely, Nigeria’s Eurobonds edged higher due to profit-taking after recent gains. Looking ahead, we expect a similar tone next week, particularly with the MPC meeting in focus.