Alan Greenspan and his US Federal Reserve pulled a rabbit out of the hat this week with a surprise half-point cut in interest rates. Cutting rates once between meetings earlier this year was unusual; doing it twice raises questions as to how much in control the Fed really is. The market is torn between fear that the move suggests there is some dire news around the corner and optimism that the Fed, after some earlier uncertainty, is promoting growth in the economy.

What is certain is that the initiative has made life even more awkward for the European Central Bank. Wim Duisenberg and his colleagues are determined not to be pushed into cutting rates by outside pressure. In any case, they have a tighter mandate of controlling inflation against the Fed's wider goal of managing economic growth.

Still, arguments are growing about the viability of the ECB's inflation target of less than 2 per cent. The US has fuelled the longest economic boom in modern history on inflation rates of between 2 and 3 per cent - roughly where the ECB has been in recent times.

This week's rising euro-zone inflation figures, if anything, lessen the chance of a May cut in rates by the ECB. And the Bank's resolve to be seen as independent means it is unlikely to bow to political pressure. Now, if only Mr Duisenberg could persuade the markets that his stance makes sense.