FX.co ★ Italy’s 10-Year BTP Yield Rises on ECB Hawkishness and Budget Concerns

The yield on Italy's 10-year BTP has risen to 3.56%, building on last week's increases to reach its peak since early October. This movement comes in the wake of the European Central Bank's (ECB) decision to maintain its current monetary policy stance and signaling that rate cuts are unlikely for at least the next year. In its recent meeting, the ECB opted to keep interest rates unchanged for the fourth time in a row, citing the eurozone's better-than-expected resilience to U.S. tariffs. Furthermore, positive economic data led the central bank to revise its growth forecast upwards, now anticipating eurozone GDP to grow by 1.4% in 2025, up from the previously estimated 1.2%. Simultaneously, the ECB expects headline inflation to remain close to its 2% target through 2028. On the fiscal side, the ECB warned that Italy's budget measures for 2026 could impact banks' liquidity, lending conditions, and investor confidence, potentially increasing the country's borrowing costs.