Europeans should be very alert to risk of deflation

U.S. Secretary of Treasury Jack Lew stressed hereWednesday European countries, especially in "surplus countries there is a need toboost demand." In an interview on CNBC, Lew said "there is a demand problem in theworld and there's a demand problem in Europe." He added "there are a number ofcountries that could do more. Germany obviously is one of the surplus countries inEurope." "If you look at Europe as a whole, the growth rate has stayed very modest.The risk of deflation is something that has a lot of people concerned," he affirmed. He believes that "the answers lie in policy decisions that could be taken. That'sactually the good news. There are solutions that would help." He stressed that "therisk of low demand and the risk of deflation is something that they need to be veryalert to and they need to take a little more, not a little less." On sanctions leviedagainst Russia, Lew stressed that President Barack Obama made very clear thatRussia's violation of Ukraine's sovereignty and its borders is "unacceptable; tooktough action against individuals who are central to the decision-making and close to the leadership; has taken action against a bank that is the bank that many of thosepeople have their assets in." "The message that there will be consequences to thesekinds of actions is very clear. The president signed an economic order that laid outoptions, delegating authority to me to do some pretty tough things," he noted. He added "the reason for that is not because we want to do that. We don't want to besanctioning Russia. We want Russia to look for a way to take decisions that willreverse what it's done and not make further incursions into Ukraine." "The bestthing for Russia and the best thing for the world is for Russia not to take the stepsto cause further sanctions to be necessary. But there should be no illusion that we'vedone everything we can do. We've put in place a blueprint that makes clear thatthere's quite a bit more we could do," he remarked.