Global Economy

USA: At its June 2025 meeting, the Federal Reserve left the federal funds rate unchanged at 4.25%–4.50% for a fourth straight time, in line with expectations. The decision reflects a measured stance as officials continue to assess the economic effects of President Trump’s policy shifts on tariffs, immigration, and taxation. While the Fed acknowledged a slight improvement in the economic outlook, uncertainty remains elevated. The Fed still projects two rate cuts in 2025 but now sees only one 25bps cut each in 2026 and 2027. Growth forecasts were trimmed to 1.4% for 2025 and 1.6% for 2026, while the unemployment rate is expected to edge higher to 4.5% in both years. Inflation projections were revised upward, with PCE inflation now seen at 3.0% in 2025, easing to 2.1% by 2027.

Sub-Saharan African Economies

China: The People’s Bank of China (PBoC) kept its key lending rates at record lows, as widely expected, maintaining a supportive monetary stance amid external pressures. This followed a 10-basis-point rate cut last month aimed at offsetting the economic impact of newly imposed U.S. tariffs, and came on the heels of deposit rate reductions by major state-owned banks. Despite the external headwinds, recent data suggest China remains on track to meet its GDP growth target. In May, retail sales posted their strongest growth in 15 months, signalling resilient consumer demand, even as industrial output slowed to a six-month low and new bank lending came in below expectations. The one-year loan prime rate (LPR), which serves as the benchmark for most corporate and household loans, was held steady at 3.0%, while the five-year LPR, used to guide mortgage rates, remained unchanged at 3.5%.

Nigeria: Nigeria’s annual inflation rate eased for the second consecutive month, settling at 22.97% in May 2025 from 23.71% in April. The moderation reflects primarily a technical adjustment driven by favorable base effects and a marginal appreciation of the naira, which helped contain imported inflation. Food inflation the largest component of the CPI basket remained elevated but continued its downward trend, slowing to 21.14% from 21.26% in the previous month. On a monthly basis, headline inflation rose by 1.53% in May, down from 1.86% in April.

Morocco: Morocco’s annual inflation rate slowed to 0.4% in May 2025 from 0.7% in April, marking the lowest level since May 2024. The deceleration was primarily driven by a softer rise in food prices, which increased by just 0.4% the slowest pace in seven months compared to 0.5% previously. Inflation also moderated across key categories, including housing and utilities (2.1% vs 3.7%), restaurants and hotels (3.9% vs 4.4%), clothing and footwear (0.7% vs 0.8%), alcoholic beverages and tobacco (3.5% vs 3.6%), and healthcare (0.2% vs 0.3%).  Notably, transport prices declined further, falling by 4.3% compared to a 4.0% drop in the previous month. On a monthly basis, consumer prices fell by 0.4% the sharpest monthly decline in 16 months following a 0.3% decrease in April.

Domestic Economy

Major updates during the week:

  • Nigeria’s inflation eased to 22.97% in May 2025 from 23.71% in April, driven by lower food and core inflation, though monthly food prices rose slightly due to floods and insecurity, increasing the probability of a 25bps rate cut at the July MPC meeting.
  • FAAC disbursed ₦1.659 trillion in May 2025, up from ₦1.143 trillion a year ago, driven by subsidy removal, improved oil and non-oil revenues, and FX gains, with sustained high allocations expected to support subnational development.
  • The National Assembly has passed four harmonised tax reform bills proposing major changes including FIRS’ transition to NRS, VAT clarity, reduced PAYE, tax relief for SMEs and households, and a broader fiscal policy reset if fully implemented.

Nigerian equity market: Investor optimism sustains post-holidays as NGX hits new high

The Nigerian stock market ended the week on a bullish note, crossing the 118,000 mark despite an earlier dip triggered by CBN’s directive on forbearance loans. However, investor sentiment improved as major banks clarified their positions, assuring continued dividend payments and alignment with regulatory expectations. Strong gains in GTCO, SEPLAT, STANBIC, MTNN, and ARADEL drove the market’s recovery, offsetting losses in OANDO, UBA, FIRSTHOLDCO, VFD GROUP, and ACCESSCORP. The NGX ASI rose 2.35% week-on-week to close at 118,138.22 points, with market capitalization up 2.40% to ₦74.53 trillion. The increase was also supported by the listing of 6.66 billion Sterling Holdco shares, while the Oil & Gas sector led gains across four of five major sectors, advancing 5.27% WoW.

Nigerian fixed-income market: DMO slashes stop rate at NTB primary market auction

The DMO conducted its second auction for July 2025, attracting strong demand due to ample system liquidity, with total bids exceeding ₦1.2 trillion. However, the DMO maintained a cautious stance, allotting only the offered ₦162 billion. This led to a decline in stop rates across the 91-, 182-, and 364-day tenors by 18 bps, 15 bps, and 51 bps, settling at 17.80%, 18.35%, and 18.84%, respectively. In the secondary market, renewed buying interest drove average yields down by 25 bps week-on-week to 20.51%. Similar bullish sentiment was observed in the bond market, supported by a softer inflation print. Nigeria’s Eurobonds also recorded gains, as investors responded positively to improved fiscal expectations amid rising oil prices.