The danger of deflation is that monetary policy may become procyclical when demand is weak

Deflation is fundamentally a situation where monetary policy becomes procyclical: the economy deteriorates, and inflation therefore falls and nominal interest rates cannot follow the decline in inflation, real interest rates rise and monetary policy becomes more restrictive while the economy deteriorates. This situation of procyclical monetary policy in a situation of sluggish demand was seen in the United States in 2002 and 2009, and in the euro zone in 1998-99, in 2009, and in 2013-2014.