Morgan Stanley's Roach says US faces deflation risk

Stephen Roach, chief economist at Morgan Stanley, said the US economy faces deflationary risks as part of the continued unwinding of the stock market bubble, which includes the possibility of multiple dips back into recession for several years to come.

"Deflation is a significant risk in the US," Roach said at an investor conference in the UK, adding that the US GDP price index is currently posting a 1% year-on-year rise, the lowest rate in 48 years.