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ECB will react to second-round inflation effects

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If it observes second-round inflation effects, and a de-anchoring medium-term inflation expects, the European Central Bank Vice President Luis de Guindos said to a German newspaper.

Investors have increased their bets on higher ECB rates as the ECB accelerated its exit form unconventional stimulus earlier this month.

Handelsblatt was told by De Guindos in a Sunday interview that second-round effects would and would de-anchor price expectations.

He said, "If they are visible, then we will act."

De Guindos answered questions about the risks to Europe's financial system from the conflict in Ukraine. He said that there were no liquidity issues, that companies are issuing bonds and that stocks were volatile, but not with "dramatic developments".

He pointed out that margin calls for commodities derivatives have been triggered, which has resulted in more collateral to cover open positions.

He said, "But according to our observation, those facing these margin call have so far been in able to meet them."

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