Is the euro area at risk of Japanese-style deflation?

Euro area inflation has long been below the European Central Bank’s objective for price stability and has continued to slow in recent months. This has given rise to heightened concerns that the euro area could soon be facing a prolonged period of deflation, as recently in Japan. The case of the United States shows, however, that the Japanese experience can be avoided. The key would seem to be the anchoring of inflation expectations. In the euro area, new measures of monetary accommodation have contributed to reducing the risk of Japanese-style deflation.