Groans of disappointment could be clearly heard on trading floors and in board rooms across Europe this week

Groans of disappointment could be clearly heard on trading floors and in board rooms across Europe this week when central bankers failed to prescribe what many thought was the best medicine for the region's ailing economy -- lower interest rates. After all, the U.S. Federal Reserve -- the keepers of the world's biggest economy -- had finally ended a year-long draught and eased the taps on borrowing, cutting its key rate by a bigger-than-expected half a percentage point. But instead of following the Fed's lead, the European Central Bank did what it has done since November 2001 -- nothing. For the 12-nation eurozone, the main concern is not deflation, but inflation -- the barometer used by the ECB to test the health of the economy and set monetary policy. So far, the ECB would argue, member countries have failed to keep inflation below the central bank's 2 percent comfort zone and many have made matters worse by not adhering to the European Union's Stability and Growth Pact, which requires governments to limit their budget deficits to 3 percent of gross domestic product. The ECB fears that overspending and large government deficits will erode confidence in the euro, pushing its value lower and making it more expensive to buy imported goods -- further flaming inflation. The biggest offenders have been countries with the biggest economies -- Germany, France and Italy. For month, central bankers have been embroiled in a debate with these countries over the deficit issue -- overlooking, says some analysts, the more important issue of interest rates.