Global Economy

U.S.A: The Federal Reserve left interest rates unchanged at 4.5% on Wednesday but flagged growing uncertainty over the U.S. economic outlook, partly due to President Donald Trump’s tariff policies. The Fed revised its GDP growth forecast for 2025 down to 1.7% from 2.1% in December, while warning that inflation could rise closer to 3% rather than the 2% target. Policymakers expressed heightened concerns, with 18 out of 19 now viewing downside risks to GDP, up from just five in December. Unemployment projections also edged higher, with 11 officials forecasting a potential climb to 4.5% this year. Fed Chair Jerome Powell noted that while tariffs are contributing to near-term price growth, the inflationary impact might be transitory. Despite stock markets rallying on the news, increased bond purchases reflected lingering growth concerns. Analysts cautioned that the Fed’s latest outlook signals a risk of stagflation — slower growth coupled with rising prices — posing fresh challenges for monetary policy.

Sub-Saharan African Economies

China: China held its key lending rates steady on Thursday as policymakers balanced the need to support growth while stabilizing the yuan amid escalating trade tensions. The People’s Bank of China (PBOC) kept the 1-year loan prime rate (LPR) at 3.1% and the 5-year LPR at 3.6%, following a quarter-point cut in October. The decision mirrors the U.S. Federal Reserve’s move to hold rates. Despite modest economic improvement — with retail sales up 4.0% and industrial output expanding 5.9% y/y — weak inflation data underscores the need for further policy support. Analysts suggest a rate cut could come as early as April if consumer and housing markets remain sluggish. The yuan traded steady at 7.2280 against the dollar, while government bond yields dipped slightly. With China targeting 5% GDP growth, officials have hinted at additional monetary easing, including rate and reserve requirement ratio cuts. However, further policy shifts may hinge on U.S. trade policies, as fresh tariffs on Chinese imports threaten to strain exports and dampen economic recovery.

Angola:The National Bank of Angola kept its key interest rate unchanged at 19.5% during its March 2025 meeting, maintaining borrowing costs at their highest level since December 2022 for the tenth consecutive month. However, the central bank moved to ease financial conditions by cutting the liquidity absorption rate by 100bps to 17.5% and lowering the reserve requirement ratio for commercial banks by 100bps to 20%. These measures aim to boost liquidity in the financial system, supporting economic growth.

Nigeria: Nigeria’s annual inflation rate fell to 23.18% in February 2025, the lowest since June 2023, down from 24.48% in January. Similarly, food inflation eased to 23.51%, its lowest level since September 2022, compared to 26.08% in the previous month. The decline was largely driven by a technical adjustment in the base year, as the National Bureau of Statistics rebased the Consumer Price Index (CPI) to 2024 from 2009 in January 2025. On a month-on-month basis, the CPI rose by 2%.

Domestic Economy

Major updates during the week:

  • Nigeria’s inflation rate eased to 23.18% in February 2025 from 24.48% in January, driven by base year effects and relative macroeconomic stability, with food inflation dropping to 23.51% while core inflation edged up to 23.01%.
  • Dangote Refinery has halted petroleum product sales in Naira due to the Federal Government’s failure to renew the Naira-for-crude agreement with NNPCL, as crude oil allocations to foreign creditors pose supply challenges, with policymakers set to reconvene on March 24, 2025, amid rising FX pressures and inflationary concerns.

Nigerian equity market: NGX downtrend continues as losses persist for the fourth consecutive week

The domestic equities market recorded its fourth consecutive weekly decline, as persistent sell pressure and profit-taking drove the NGX ASI down by 0.94% to 104,962.96 points. Losses in heavyweight stocks like BUA Cement (-10.00%), Access (-5.56%), and GTCO (-4.59%) outweighed gains in JBERGER (+8.47%) and TRANSCORP (+7.85%). Market breadth remained negative, with 48 losers against 32 gainers, highlighting weak investor sentiment. Sectoral performance was largely bearish, with only the Consumer Goods sector posting a marginal gain of 0.06% WoW. Investor sentiment stayed bearish, reflecting cautious trading and sustained profit-taking.

Nigerian fixed-income market: DMO issued a new 1-year bill at 26.3% yield.

This week, the DMO issued ₦503 billion despite receiving total bids of up to ₦902 billion, with the discount rate on the 1-year maturity rising to 19.94% from 18.39%. This issuance reinforced the bearish sentiment in the market, as investors factored in prevailing liquidity constraints. In the secondary market, yields increased by 16bps, primarily driven by long-term maturities. A similar trend was observed in the bond market, where the average yield climbed 29bps to 18.75%. Nigeria’s Eurobonds also mirrored this movement, with the average yield rising by 0.09% to 9.51%. We anticipate a continuation of this sentiment in the coming week as investors digest the market expectation of the scheduled auctions.