An economic calm before the storm?

By The Economist

2023.01.17

In economics as in pole-vaulting, a soft landing is preferable to a hard one. Most recently America’s finance wonks have been using the term to refer to a slow easing of demand and price pressures, partly as a result of increases in interest rates. (A recession, in contrast, would constitute a hard landing.) Such is the desire of the Federal Reserve, which since March 2022 has raised its benchmark rate from between zero and 0.25% to between 4.25 and 4.5%. Yet the inflation rate stayed stubbornly high for much of last year.