FX.co ★ Italy’s BTP Yield Jumps on Iran Oil Surge, ECB Rate Hike Bets

Italy’s 10-year BTP yield climbed to 3.86%, its highest level since April 2025, as surging energy costs and the European Central Bank’s hawkish stance intensified expectations of multiple interest rate hikes in 2026. Brent crude rose above $110 per barrel after attacks on refineries in the Middle East, amid reports that the United States may target Iran’s Kharg Island, a critical oil export hub.

Investors now foresee at least two ECB rate increases this year, with a possible third, after the central bank left interest rates unchanged but upgraded its inflation projections and lowered its growth forecasts. ECB Governing Council member Joachim Nagel cautioned that a rate hike could come as soon as next month if inflationary pressures fail to ease, while François Villeroy de Galhau underlined the bank’s readiness to act decisively in the face of rising geopolitical risks.