20.03.202609:05:03UTC+00French Bond Yields Near Multi-Year Highs on ECB Inflation Warnings

France’s 10-year OAT yield eased to 3.62% on Friday, staying just below the 14-year peak of 3.71% reached the previous day. The pullback followed the European Central Bank’s warning about persistent inflation pressures, intensified by surging energy prices linked to the Iran conflict, which has reinforced expectations of imminent interest rate hikes.

Although the ECB left policy rates unchanged at its Thursday meeting, it adopted a more hawkish stance, raising its inflation forecasts while cutting growth projections. Major banks now anticipate a rate increase as early as April, with markets fully pricing in a hike by June and assigning a 60% probability to a move in May. ECB policymaker Joachim Nagel signaled that a rate rise could come as soon as next month if inflation pressures build further, while François Villeroy de Galhau underlined the bank’s readiness to act decisively whenever necessary.