The key question for the Fed, and the other major central banks (other than, perhaps, the ECB which has to deal with the continuing impacts of the war) is whether they can continue to bring inflation rates down towards their targeted ranges of two to three per cent without bringing on recessions.
The fact that the US economy was growing at a respectable rate towards the end of last year suggests a soft landing is possible.
That will be dependent on what the Fed does this week and at future meetings and how it manages the balance of risks between avoiding a new surge in the inflation rate by relaxing policy too early and plunging the US into recession by hiking rates higher for longer than is necessary to engineer a soft landing.
The US economy is desperate for a “soft” landing.Credit:Bloomberg
A similar dilemma will confront the Reserve Bank when it meets next week, even though the headline Australian inflation rate is, at 7.8 per…
