Global Economy

U.S.A: At its January 28-29 meeting, the Federal Reserve decided to hold rates at 4.25%-4.5%, noting that further cuts would only be considered once inflation moves closer to the 2% target and the economy remains near maximum employment. Officials also discussed the possibility of pausing or slowing balance sheet runoff amid renewed debt ceiling concerns, while markets now expect only one or two rate cuts in 2025. Additionally, uncertainties around President Trump’s policies on tariffs and immigration—which could disrupt growth and stoke inflation—were a topic of discussion. The Fed also launched a five-year review of its monetary policy framework to reassess its post-pandemic response and to consider restructuring its asset purchases to better match the maturity composition of outstanding Treasury debt.

Sub-Saharan African Economies

Japan: Japan’s economy grew 0.7% q/q in Q4 2024 driven by strong business investment and robust net external demand as exports rose and imports fell—beating expectations. Government spending and capital expenditure improved, although private consumption only increased by 0.1%. Annualized Q4 GDP expansion reached 2.8%, and Japan’s nominal GDP climbed to 609.29 trillion yen, marking its first time above 600 trillion and confirming its status as the world’s fourth-largest economy despite potential headwinds from rising food prices and U.S. tariff threats.

Egypt: The Central Bank of Egypt held its benchmark rate steady at 27.25% in February 2025, extending its record-high stance for the 11th consecutive month to curb inflation. Headline inflation eased to 24.0% in January, with core inflation at 22.6% and food inflation declining to 20.8%, though non-food inflation remained elevated at 25.5%. Despite moderation, inflation remains well above the 7% ±2pp target, pressured by geopolitical risks and fiscal measures such as higher fuel prices. The CBE extended its inflation targets to 7% by Q4 2026 and 5% by Q4 2028 to guide long-term stability.

Nigeria: Nigeria’s inflation rate fell to 24.48% in January 2025 from 34.80% in December, following a CPI rebasing to better reflect consumption patterns. However, the NBS clarified that this decline does not indicate a drop in price levels but stems from the new base year (2024) being closer to the current period. Rebased food inflation eased to 26.08% y/y from 39.84%, while the core index declined to 22.59% from 29.28%. Meanwhile, the CBN kept rates at 27.50% in February after six hikes last year, citing naira stability but stressing the need for continued price monitoring.

Domestic Economy

Major updates during the week:

  • Nigeria’s rebased inflation rate fell to 24.48% in January 2025 from 34.80% in December 2024, with core inflation at 22.59% and food inflation at 26.08%, driven by hospitality services, food and beverages, transportation.
  • The CBN’s MPC maintained interest rates at 27.50% during its February 2025 meeting, aligning with analyst expectations and reflecting a cautious stance following the rebased CPI report, as other key indices remained unchanged while the central bank adopts a ‘wait and see’ approach ahead of the anticipated rebased GDP data.

Nigerian Equity Market: NGX extends bullish streak for the fifth consecutive week

The Nigerian equities market sustained its bullish momentum for the fifth consecutive week, driven by portfolio rebalancing, earnings optimism, the MPC decision, and moderating inflation. Despite 58 equities declining against 28 gainers, investors saw a ₦95.93bn increase in market capitalization, closing at ₦67.61trn, up 0.29% despite the cancellation of 166.95m DANGCEM shares. The NGX ASI gained 0.41% to close at 108,497.40 points, supported by gains in BUAFOODS (+11.91%), NASCON (+6.33%), and DANGSUGAR (+15%) Sectoral performance was largely positive, with three of five sectors closing bullish, led by the Consumer Goods sector, which surged 6.55% WoW.

Nigerian fixed-income market: Primary market auction drives yields lower.

Early this week, the NBS published the latest inflation data using 2024 as the base year and an updated basket. The report showed that headline inflation declined to 24.48% in January 2025 (from 34.80%). In response, market participants factored this into the NTB auction, driving the rate on the 1-year instrument down to 18.43% (from 20.32% previously). Despite receiving bids totaling ₦2.4 trillion, the DMO issued only ₦774 billion. This triggered a rally in the secondary market, with average yields on treasury bills and bonds dropping by 189bps and 78bps, respectively. Nigeria’s Eurobonds also experienced strong demand, leading to a 14bps decline in average yields to 8.93%. In the coming trading week, we anticipate sustained buying interest as investors continue to seek attractive returns.