Does Europe's deflation forebode a Japan-style 'lost decade'?

Inflation is Europe has become worryingly low, and the situation is reminiscent of Japan in the 1990s. Rathbones' Mona Shah explores whether the ECB's actions will be enough to prevent a downward spiral.

The optimal level of inflation for a healthy economy is around 2%-3%. Anything above or below can be harmful. Deflation is particularly damaging because it depresses activity by both consumers and businesses. After all, why spend today when prices will be lower tomorrow? Japan provides a pertinent example. When its government raised the consumption tax rate in 1997, a recession soon followed, as well as a deflationary spiral. The country is still struggling to break free. Does Europe face a lost decade? The question is whether continental Europe will head the same way as Japan. Alt...