With many central banks backed into a corner with ultra-loose monetary policy even before the crisis, the US has quickly out-eased its peers, squelching criticism - from the president, among others - of earlier rate hikes and widening the gap between price expectations in the US and euro area to a decade high.
The Fed has made reviving inflation a cornerstone of its recovery playbook, announcing a new framework last month that would allow prices to exceed its 2 per cent target to offset periods of depressed gains. That policy gained sharper teeth this week when the Fed said it would look to see this level of inflation - as well as full employment - before hiking rates.
Investors are clamouring for more detail on how the Fed will encourage inflation, but they've already paid attention to the change in tone. And ECB president Christine Lagarde warned last week that the situation may get worse in the near term, despite the central bank moderately raising its forecast for price gains in 2021.
"There are a multitude of factors at play here, but Europe has been struggling to generate inflation for quite some time now. Even before Covid-19, the ECB has struggled to generate inflation."