The reason they get so concerned is the possibility that it may not be easy to escape from such a situation. To put this at its most stark, imagine an economy in which deflation is strongly expected to continue, at a rate which exceeds the natural real interest rate in the economy – that is the equilibrium return on real capital.
BIS central bankers’ speeches  1  Even if I wanted to, I couldn’t give you the full list of topics he’s covered. Today, I will highlight just three issues that have been milestones over the last 25 years of Germany’s economic history. And they all bear some lessons for today’s economic challenges in Europe.