ECB's Villeroy says the ECB must be ready to intervene on second round effects; underlying inflation is currently under control

Villeroy's remarks indicate a cautious stance from the ECB regarding inflation, suggesting specific vigilance on second-round effects despite current underlying inflation being contained. This nuanced positioning may hint at potential policy adjustments, impacting expectations for future rate paths and influencing not only EUR valuations but also fixed income markets as traders weigh intervention risks.