FRANKFURT (Reuters) - The European Central Bank does not need to react to recent sharp increase in sovereign bond yields as post-election U.S. politics justify the steepening of the yield curve and this also benefits banks, ECB Vice President Vitor Constancio said on Monday.

"I don’t see any need to react specifically to that," Constancio said on the sidelines of a conference.

"That's part of the contagion coming from the U.S., where there are specific factors that justify the steepening of the yield curve, the increase in medium- and long-term yields, so there is contagion but, as I also mentioned, that’s also a good thing for financial institutions," he said.

Constancio said that he was not any more concerned about low core inflation than earlier, but would like to see a turning point, reflecting productivity growth and better headline inflation.

(Reporting by Balazs Koranyi; Editing by Kevin Liffey)