While concern is building over long-term inflation, many experts say deflation still represents the main short-term risk.
Nobel laureate economist Joseph Stiglitz is one of them.
“Deflation is definitely a threat right now,” the Columbia University professor told Bloomberg.
“The combination of the deflation threat and the sluggish recovery should keep the Fed on hold for quite a while.”
Superstar bond fund manager Bill Gross has sounded the deflation warning too.
“The potential for a deflationary downdraft continues for several years” if the economy stays sluggish, the Pimco executive told Bloomberg.
Consumer prices dropped 1.5 percent in the year through August, though prices rebounded 0.4 percent that month from July.
Several regional Federal Reserve Bank presidents recently have raised the deflation issue as well.
The group includes Janet Yellen of San Francisco, James Bullard of St. Louis, Richard Fisher of Dallas, and Charles Evans of Chicago.
Their concern indicates the Fed may refrain from raising interest rates for a long time, just as Stiglitz predicts.
Some experts, including economists at JPMorgan Chase and Goldman Sachs, say rates will stay at current levels through next year. The federal funds rate target now stands at zero to 0.25 percent.
Not everyone sees deflation as the first concern.
Investment guru Jim Rogers is more worried about inflation.
"The true inflation rate in America? It's certainly at least 6 or 7 percent,” he tells CNBC.
“The U.S. government lies about it, as you know.”
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