March 28 (Reuters) - Euro zone bond yields edged up on Thursday after Federal Reserve Governor Christopher Waller advocated a higher-for-longer rate strategy in cautious markets ahead of key inflation data, which could affect the central banks' policy path.
** Waller said it was prudent to hold rates at the current restrictive levels for longer to help keep inflation on a sustainable trajectory toward 2%.
** Belgium will issue inflation figures later in the session, France, Italy and the U.S. on Friday, while German and euro area-wide figures are due next week.
** Germany's 10-year bond yield, the benchmark for the bloc, was up 1.5 basis points (bps) at 2.31%, after hitting 2.292% late on Wednesday, its lowest since March 12.
** Markets fully priced in a 25 bps ECB rate cut by June and around 90 bps by year-end.
** Italy's 10-year bond yield was 3.5 bps higher at 3.65% , with the closely watched gap to Germany's 10-year yield at 132 bps.
** Germany's 2-year bond yield, which is more sensitive to European Central Bank rate expectations, rose 2.5 bps to 2.83%. (Reporting by Stefano Rebaudo, editing by Shri Navaratnam)
