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The outcome where the Fed raises rates just enough to cool inflation back to target without tipping the economy into a recession. The "hard landing" is the opposite — rates choke off growth and a recession follows.
Why It Matters
Whether the Fed can engineer a soft landing is one of the most-watched questions in markets, because it largely determines whether stocks face an earnings recession. It's historically hard to pull off — which is why every inflation and jobs report gets parsed for clues about which landing is coming.
Key Points
- Soft landing = inflation cools without a recession; hard landing = recession.
- Historically difficult — few tightening cycles end in a clean soft landing.
- Markets price the odds via inflation, jobs, and growth data between meetings.
Related Terms
Common Questions
The outcome where the Fed raises rates just enough to cool inflation back to target without tipping the economy into a recession. The "hard landing" is the opposite — rates choke off growth and a recession follows. Whether the Fed can engineer a soft landing is one of the most-watched questions in markets, because it largely determines whether stocks face an earnings recession. It's historically hard to pull off — which is why every inflation and jobs report gets parsed for clues about which landing is coming.
Whether the Fed can engineer a soft landing is one of the most-watched questions in markets, because it largely determines whether stocks face an earnings recession. It's historically hard to pull off — which is why every inflation and jobs report gets parsed for clues about which landing is coming.
Soft landing = inflation cools without a recession; hard landing = recession.
Historically difficult — few tightening cycles end in a clean soft landing.
Markets price the odds via inflation, jobs, and growth data between meetings.