Euro zone bond yields were little changed on Wednesday as investors waited for the Federal Reserve's interest rate decision later in the day.

Germany's 10-year bond yield, the benchmark for the euro zone bloc, rose 1 basis point (bp) to 2.246%.

Italy's 10-year yield was 2 bps higher at 3.406%, and the gap between Italian and German bond yields stood at 116 bps.

The Fed is expected to cut rates by 25 bps. The central bank strongly influences the U.S. government bond market, which sets the tone for borrowing costs around the world.

"The next 36 hours will be dominated by central bank decisions," said Erik Liem, rates and credit strategist at Commerzbank.

The Bank of Japan, Bank of England, Sweden's Riksbank and Norway's Norges Bank all set interest rates on Thursday.

On the Fed, Liem said: "As a 25bp rate cut is firmly priced in, the focus will be on Powell's remarks for the path going forward, which could suggest a more cautious approach."

The benchmark German 10-year bond yield has risen around 12 basis points since the ECB cut interest rates last Thursday but said the fight against inflation was not over, leading traders to trim their expectations for further cuts next year.

Euro zone inflation came in at 2.2% in November, a final reading showed on Wednesday, a slight downgrade from a previous estimate of 2.3%.

Germany's two-year bond yield, which is sensitive to European Central Bank rate expectations, fell 2 bps to 2.035%.

The gap between British and German 10-year government bond yields rose to its highest level in 34 years on Wednesday at 230 bps, in a sign of the diverging trajectories of the Bank of England and ECB.

Investors expect the BoE to hold rates steady on Thursday. Britain's inflation rate rose to 2.6% in November, data on Wednesday showed.

(Reporting by Harry Robertson; Editing by Christina Fincher and Alex Richardson)