Europe’s Policymakers Get Ready to Lower Rates, Regardless of the Fed

Europe’s central bankers are trying to get out of the shadow of the United States.

For much of the past two years, policymakers on both sides of the Atlantic raised interest rates aggressively to fight a surge in prices, and since last summer, they have left rates high as they assess whether inflation is under control.

Now, European Central Bank policymakers are emphasizing how much the inflation problem has eased in the eurozone. Last week, they flocked to meetings of the International Monetary Fund and World Bank in Washington with a common message: Europe’s economy is not like that of the United States.

All week, Europe’s policymakers reiterated their growing confidence that high inflation was dissipating in the eurozone and that their 2 percent inflation target was in sight. The E.C.B., which sets interest rates for all 20 countries that use the euro, has signaled it could cut rates at its next policy meeting in early June.

“We’re clearly in a disinflation process,” said Gabriel Makhlouf, governor of Ireland’s central bank and one of the 26 members of the E.C.B.’s governing council. But, he added, “you can argue that what’s happening in the U.S. is potentially a sort of a re-acceleration.”

The Federal Reserve is facing surprisingly strong inflation readings, and investors have pushed back to the end of the year their bets on a rate cut. But that gloom has spilled over into European financial markets, pushing bond yields higher and complicating the picture for the eurozone policymakers.

“We can’t ignore what’s happening in the U.S.,” Mr. Makhlouf said. Europe is an open economy, and events in other parts of the world have an impact, he added, “but it’s not the totality of what affects the European economy.”