The effect is deeply corrosive even if the region never crosses the line into technical deflation. "Lowflation" near 0.5pc can play havoc with debt trajectories if it goes on for long, ultimately throwing Europe back into a debt crisis.

"Based on our outlook for 'lowflation' (these smarties have invented a new word) and lower interest rates, our researchers are bullish on taxable bonds," said Constance Russo, editor of one of the firm's investment advisory letters.

Indeed, the concept of a lower rate of inflation has become so accepted that analysts at Prudential-Bache Securities Inc. in New York no longer refer to disinflation. "We've come up with a new label — 'lowflation,' " said Greg A. Smith, director of research.