Eurozone yields at top of recent range ahead of ECB meeting

The de-escalation of inflation is not expected to convince the ECB to stop its interest rate hikes. [REUTERS]

Eurozone government bond yields edged lower on Friday but were still at the top end of their recent range as investors braced for a European Central Bank policy meeting tilted to the hawkish side late next week.

Analysts expect the ECB to raise rates by 25 basis points while being careful not to signal a pause in the tightening path. Such a move might lead markets to scale back their bets about future rate hikes, triggering an unwanted easing of financial conditions.

Still, they believe the ECB cannot raise rates too far as the economy is weakening, and core inflation might follow suit.

Germany's 10-year government bond yield was down 1 basis point (bp) at 2.41%. It fluctuated between 2.25% and 2.55% since late March.

The policy-sensitive two-year yield was flat at 2.97% after trading between 2.5% and 3% in the last few weeks.

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