Interest rates are likely headed down, at least in Europe

FILE - President of European Central Bank, Christine Lagarde, attends a press conference after an ECB's governing council meeting in Frankfurt, Germany, on Jan. 25, 2024. The European Central Bank appears ready to start cutting interest borrowing costs for businesses and consumers - and do it ahead of the Fed. Analysts say a first rate cut is coming Thursday when the bank's policymakers meet in Frankfurt, Germany. .

Fed Chair Jerome Powell has said the bank expects to cut rates this year from the current benchmark level of 5.25%-5.5%, but no change is expected at the Fed's next policy meeting on June 11-12. WithWidening the rate gap between Europe and the U.S. could, in theory, weaken the euro against the dollar by pulling more investment money out of the eurozone and into dollar holdings in search of higher returns. That would hurt the ECB's inflation battle by making imports more expensive.

Growth in economic output has hovered just above and below zero for more than a year before a modest upbeat surprise in the first three months of the year, when gross domestic product rose 0.3% from the quarter before.

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