Could the euro zone slide into deflation?

Trends in interest rates, expected inflation and growth prospects could indicate that the euro zone will return to deflation; the same holds for the chronic situation of excess savings in the euro zone despite the negative real interest rates. But recent ma croeconomic developments nevertheless lead us to reject this deflation hypothesis: The stimulation of demand, via real wages and fiscal policy, is quite significant; The acceleration in unit labour costs - even though is only partially passed on to prices - definitely prevents inflation from becoming very low .