But the convergence reached its finale Thursday, when countries like Ireland and Portugal cut their rates by more than a half-point and brought them even with the low bar set by Germany. The 11 countries launching the euro are Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal. Italy is now the only country in the euro zone with a base interest rate that is higher than 3.0 percent. But Italy cut its rates, too, and is expected to match those of its neighbors before Jan. 1. Economists and bankers disagreed about whether Europe would have to lower rates even more in the months ahead.
European rates are already about a full percentage point below the United States Federal funds rate.
But private economists like Ferry at Credit Commercial predicted that Duisenberg would have to reduce rates to about 2.5 percent by the middle of next year. The central banks are beginning to recognize that inflation is no longer a problem and that deflation might be the bigger problem.