The Low-Inflation Trap

What this means is that much of any further decline in expected inflation — which has plunged lately — will translate into a rise in real interest rates. And that will be a drag on the economy, leading to further inflation declines. Basically, we can get into the functional equivalent of a deflationary trap long before we reach actual deflation. And it starts around now.

http://krugman.blogs.nytimes.com/2011/09/23/the-low-inflation-trap-slightly-wonkish/