US Treasury semiannual report: Europe faces deflation risk

FXStreet (Bali) - The U.S. Treasury Department, in its semiannual report, said that Europe faces the prospects of entering a deflationary cycle, noting that Germany could do better on assisting the region's stagnant economic growth.

"Europe faces the risk of a prolonged period of substantially below-target inflation or outright deflation," the Treasury said.

Additional headlines (via Reuters)

Referring to Europe: Actions to boost demand by surplus countries like Germany would help regional economy.

ECB actions to boost demand should help combat deflation risks but more policy support may be needed.

Treasury concludes in semiannual currency report that no major US trading partner has manipulated exchange.

South korean won undervalued, authorities should allow it to appreciate further.

China intervention in FX markets has apparently decreased but yuan still significantly undervalued.