Economics
Soft Landing
Engineering a soft landing is one of the hardest tasks in economics. The central bank must raise rates enough to cool demand and tame prices, yet stop short of choking off growth and triggering widespread job losses.
Soft landings are rare precisely because the effects of policy hit the economy with long and variable lags. By the time the data confirm that inflation is under control, tightening may already have done more damage than intended.
When markets grow confident a soft landing is achievable, risk assets tend to rally as investors price in continued growth alongside falling inflation.
Example
If inflation cools while unemployment stays low, commentators will describe the outcome as a soft landing.
Soft Landing — FAQ
What is Soft Landing?
A soft landing is when a central bank slows the economy enough to bring down inflation without tipping it into a recession.
Can you give an example of Soft Landing?
If inflation cools while unemployment stays low, commentators will describe the outcome as a soft landing.
Understanding creates conviction.
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