Biggest Threat, Inflation or deflation?

The FOMC said in its statement last month that the recovery “is likely to be moderate for a time.” Low rates of resource use and subdued inflation “are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” their statement said. Central bankers have used the “extended period” phrase in statements since March 2009.

“such forward guidance would not limit the Committee’s ability to commence monetary policy tightening promptly if evidence suggested that economic activity was accelerating markedly or underlying inflation was rising notably.”

This information is coming from the minute released by the US Federal Reserve...

To my view it clearly shows that they will not allow high inflation to emerge - they have tool for that, increasing interest rates however it seems that they still fear the deflation threat which is still in the pipeline since it is much harder to fight...

So no high inflation or hyper inflation coming... In the worse case, if they have underestimated the recovery and the inflation threat, they could react the way they did in the late 80's, raising rates to very high level...

However I still think that we are heading (especially in Europe) to much more troublesome economical time ahead which will warrent low rates (something that could look like a japanese scenario or a German one with regard to the economical situation, interest rates and value of housing)