Euro zone bond yields muted after Fed rate cut

LONDON, Sept 19 (Reuters) - Euro zone government bond yields were muted on Thursday, a day after the Federal Reserve kicked off its easing cycle with a larger than usual interest rate cut but signalled policy moves would be measured through the end of the year.

The Fed lowered its key interest rate by 50 basis points (bps) to the 4.75%-5.00% range, when most analysts saw a quarter-point cut as the most likely outcome.

But in flagging that they only see another 50 bps of cuts by the end of 2024, policymakers hinted they might lower rates at a steady pace.

"(Fed Chair Jerome) Powell clearly indicated that the FOMC was in no rush to cut and one should not assume that 50bp is the new pace of rate cuts," said Mohit Kumar, chief Europe economist at Jefferies.

"The FOMC remains data dependent, but my read on Powell's view of future cuts is that we should expect 'at most' one more 50bp cut and then the pace would move back to 25bp increments."

The size and importance of the U.S. economy means that the Federal Reserve has an outsized influence on financial markets and central banks globally.

Germany's 10-year yield, the euro zone's benchmark, was up 1.5 bps to 2.208%, a 1-1/2 week high.

The two-year yield, which is more sensitive to changes in interest rate expectations, was down 1 bp at 2.254%.

Italy's 10-year yield was 0.5 bps higher at 3.581%, and the gap between Italian and German bund yields was at 136 bps. (Reporting by Samuel Indyk Editing by Mark Potter)