FX.co ★ Italy’s BTP Yield Eases but Stays Near 11-Month High

Italy’s 10-year BTP yield slipped below 3.7%, remaining just under last week’s 11-month high of 3.81%, as investors stayed cautious ahead of a series of key central bank decisions. At the same time, rising oil prices—driven by the escalating US-Israeli conflict with Iran—continued to fuel concerns about inflation. Markets are now pricing in a tighter monetary stance from the European Central Bank by year-end, with a July rate hike fully anticipated and an 85% probability of a second increase by December. This week, the ECB, the Federal Reserve, and the Bank of England are all expected to leave interest rates unchanged, with investors closely watching for any signals on how policymakers plan to address the economic fallout from the conflict. On the data front, Italy’s EU-harmonized inflation rate for February was revised down to 1.5% from a preliminary estimate of 1.6%, keeping it below the ECB’s 2% target.