FX.co ★ Italy’s BTP Yields Fall to Lowest Level in Over a Month

Italy's 10-year BTP yield has declined to approximately 3.45%, reaching its lowest point since early December. This shift aligns with similar movements seen across major European markets and reflects the impact of recent economic data, which has dampened the anticipation of additional ECB rate hikes within the year. Inflation within the Eurozone has decreased to 2%, marking the lowest level observed since August, while core inflation has dropped below expectations to 2.3%. Among prominent European economies, inflation has slowed in Germany, France, and Spain; however, in Italy, it has edged up slightly to 1.2%, still remaining under the ECB’s 2% target. As a result, market analysts now foresee the ECB maintaining its policy rate at 2% through 2026. Concurrently, Italy's PMI data indicates a persistent contraction in its construction sector as the year concludes. From a fiscal perspective, Italy's budget deficit has been reduced to 4.5% of GDP in the first nine months of 2025, an improvement from 4.7% recorded in the previous year.