European bonds continue to rise, European Central Bank warns of downside risks to economic growth.

The European Central Bank kept interest rates unchanged and stated that the upward risks to inflation and the downward risks to economic growth have intensified. As a result, European bond prices continued to rise. The yield on German two-year government bonds fell by 9 basis points to 2.66%. The euro rose by 0.2% to 1.1696 against the US dollar, after briefly rising by 0.4%. Swap trading indicates that the European Central Bank will raise interest rates by 74 basis points this year, slightly below the market's previous expectations of 77 basis points. The ECB stated that decisions will be based on an assessment of the inflation outlook and related risks, taking into account economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy. The portfolio of asset purchase programs and emergency pandemic bond purchase programs is declining at a controlled and predictable pace as the euro system no longer reinvests the principal of maturing securities.