European Central Bank (ECB) deputy president Luis de Guindos said the central bank had the flexibility to tackle unwanted bond yield increases.
De Guindos attributed the recent rise in bond yields to partly due to higher inflation expectations in the United States following a major stimulus package by President Joe Biden, as well as rising commodity prices and a recovery in global demand.
However, it is still unclear whether the recent increase in bond yields will affect the financial situation in the European Zone, de Guindos said while speaking to a Portuguese newspaper.
He added that if this increase has a negative impact, then the central bank is open to re-calibrate their programs, including the Pandemic Emergency Purchase Program (PEPP) if needed.
The ECB is likely to increase its inflation forecast for 2021 at its policy meeting next week, but most of this year's increase is only temporary, so banks are less concerned about short-term price hikes, de Guindos said.
At the time of writing, the EUR / USD pair is still trying to stay above the 1.20000 support level at the beginning of the European session, as the US dollar continues to gain support from high treasury yields.
