Global Economy

U.K: The Bank of England lowered its benchmark Bank Rate by 25 basis points to 4.5% in its February 2025 meeting, marking the third rate cut since August. The decision was unanimous among all nine Monetary Policy Committee members, contrary to expectations of an 8-to-1 vote, with two members advocating for a steeper 50bps cut, including hawkish policymaker Catherine Mann. The Bank reiterated that monetary easing will be gradual this year as it balances slowing economic growth against persistent underlying services inflation. However, it downgraded its growth forecast for 2025, citing weaker-than-expected economic activity since November, signaling a dovish shift in policy considerations.

Sub-Saharan African Economies

Eurozone: Eurozone inflation edged up to 2.5% in January 2025 from 2.4% in December, slightly exceeding market expectations, marking its highest level since July 2024. The uptick was largely driven by a sharp acceleration in energy costs (1.8% vs 0.1% in December), while inflation for non-energy industrial goods remained steady at 0.5%. Price increases slowed for services (3.9% vs 4.0%) and food, alcohol, and tobacco (2.3% vs 2.6%). Core inflation, which excludes food and energy, held steady at 2.7% for the fifth consecutive month, slightly above forecasts but at its lowest since early 2022, suggesting persistent underlying price pressures despite recent easing trends.

Ghana: Ghana’s consumer inflation eased slightly to 23.5% in January 2025, down from 23.8% in December, which was an eight-month high. This marks the first decline in five months, though inflation remains well above the Bank of Ghana’s 8% target range, with a 6%-10% tolerance band. The central bank recently cautioned that inflation is expected to take longer to return to target. The decline was driven by a slowdown in non-food inflation (19.2% vs. 20.3% in December), while food inflation edged higher (28.3% vs. 27.8%). On a monthly basis, consumer prices rose by 1.7%, following a 1.8% increase in the previous month.

Kenya: The Central Bank of Kenya reduced its benchmark interest rate by 50 basis points to 10.75% on February 5, 2025, marking its fourth consecutive cut. Governor Kamau Thugge stated that the Monetary Policy Committee (MPC) opted for the reduction as inflation is expected to remain below the 5% midpoint of the central bank’s target range in the near term, supported by stable core inflation, low energy prices, and exchange rate stability. Core inflation, which excludes food and energy, eased to 2% from 2.2% in December, indicating subdued demand. Additionally, the central bank lowered the cash reserve ratio by 100 basis points to 3.25% to encourage lower lending rates and boost economic activity.

Domestic Economy

Major updates during the week:

  • Nigeria’s federal government increased the proposed 2025 budget from ₦49.70 trillion to ₦54.23 trillion, a 36.62% rise from 2024, with plans to generate an additional ₦4.23 trillion from GOEs, FIRS, and NCS while expanding expenditures across key sectors
  • The CBN has extended BDC access to FX purchases from Authorized Dealers on the NFEM until May 30, 2025, with a weekly cap of $25,000 per dealer, while mandating a maximum 1% margin above the buying rate
  • The Federal Executive Council (FEC) approved the issuance of ₦758 billion in bonds to settle accumulated pension obligations, addressing long-standing liabilities and improving retiree welfare.

Nigerian equity market: NGX rallies as investors digest earnings releases

The domestic bourse sustained buying interest as more companies released earnings and investors anticipated dividend announcements. The All-Share Index (ASI) closed the first week of February up 1.38%, reaching 105,933.03 points from 104,496.12 points the previous week. Gains in PRESCO (+19.69%), BETAGLASS (+20.98%), NNIG (+20.96%), and ETERNA (+32.79%) offset losses in MECURE (-9.71%) and MULTIVERSE (-9.95%). Sector-wise, bullish sentiment dominated as four of five major sectors closed positive, with the insurance sector remaining flat.

Nigerian fixed-income market: DMO limits supply at NTB auction.

At this week’s treasury bills auction, the DMO demonstrated its commitment to curbing short-term borrowing by issuing only ₦670 billion, despite receiving total bids of ₦3.22 trillion. As a result, the stop rate on the 1-year bill dropped to 20.32% from 21.80% at the previous auction. Strong demand spilled into the secondary treasury market, driving the average yield down by 89 basis points to 22.53%. Similarly, the bond market saw sustained buying interest, leading to a 16-basis-point decline in the average yield to 20.53% week-on-week. Meanwhile, in the Eurobond market, Nigeria’s sovereign bonds ended the week largely unchanged, with the average yield at 9.32%, compared to 9.31% in the previous week.