Diving inflation, deeper malaise?

Equity markets should be encouraged by Bank of England Governor Mark Carney's optimism that inflation will at some point start to rise back towards the central bank's 2% target. However, investors must remain vigilant to the possibility that he is wrong and that his downside risk scenario of entrenched deflation actually materializes. Deflation, once it becomes entrenched, can have horrible consequences, particularly for investors. Since interest rates can't go negative - if they did we'd all pull our money out from the bank - deflation means higher real interest rates and thus eve...