Navigating the Elusive Quest for a Soft Landing: Insights from Fed's Powell and WSJ's Timiraos

Federal Reserve Chair Jerome Powell reaffirmed that achieving a soft landing is a primary objective for the central bank, despite acknowledging that it is not the baseline expectation. A soft landing refers to a successful tightening cycle where interest rates are raised enough to slow the economy and control inflation without causing a recession. Powell's remarks highlight the risks and challenges of intentionally hindering the economy to control inflation. The concept of a soft landing is difficult to define and historically requires a rare combination of favorable conditions and luck. The stock market reacted negatively to Powell's comments, with major indices ending the day in the red. Powell emphasized that the Fed's ultimate goal is to restore price stability and prevent prolonged economic uncertainty.