Italian Yields Edge Higher as ECB Signals Caution on Further Rate Cuts

Italy’s 10-year BTP yield climbed back above 3.45%, rebounding from a four-month low of 3.43% reached on June 9, as investors assessed recent commentary from European Central Bank officials and awaited developments in US-China trade negotiations.

ECB Governing Council member François Villeroy de Galhau reaffirmed the central bank’s readiness to act swiftly on interest rates if necessary, despite eight consecutive rate cuts—a sequence he said had "normalized" monetary policy.

While the latest rate cut met expectations, ECB President Christine Lagarde suggested that the easing cycle may be nearing its end.

The deposit facility rate now stands at 2%, following a decline in Eurozone inflation to 1.9% in May 2025.

Meanwhile, the Eurozone economy expanded by 0.6% in the first quarter of 2025, marking the strongest quarterly growth since Q3 2022.