Italy’s BTP yield near August 2022 lows as ECB prepares for rate cut

Italy’s 10-year BTP yield stood at around 3.2%, near its lowest level since August 2022, as traders prepare for the ECB’s upcoming monetary policy decision.

Italy’s BTP yield near August 2022 lows as ECB prepares for rate cut

The central bank is widely expected to reduce the key deposit rate by 25 basis points for the fourth time on Thursday, bringing it down to 3%. Market expectations now suggest a faster pace of policy easing, with predictions of a quarter-point rate cut at each meeting through June, potentially lowering the deposit rate to 2%. The Eurozone economy continues to show signs of weakness, compounded by political uncertainty in France and Germany and geopolitical risks following Donald Trump’s election.

ECB's Lagarde warns of potential Eurozone slowdown amid downside risks

Adding to the cautious sentiment, ECB President Christine Lagarde cautioned during a parliamentary hearing that Eurozone growth could slow in the months ahead, with downside risks dominating the medium-term outlook.