Soft Landing

A soft landing is when a central bank (like the Federal Reserve) successfully slows down an overheating economy without triggering a recession. Think of it as gently tapping the brakes instead of slamming them. You'll hear this term whenever the Fed is raising interest rates to fight inflation—investors and economists are basically hoping the economy cools down just enough to control prices, but doesn't tip into job losses and economic contraction. It's the Goldilocks scenario: not too hot, not too cold. For example, if the Fed raises rates and inflation drops from 8% to 3% while unemployment stays steady, that's a soft landing. It's rare and tricky to pull off, which is why markets pay close attention when officials discuss it.