Sandra Waliczek
August 8, 2025
Central banks are trying to engineer a soft landing from economic turmoil. They can achieve it by raising interest rates to curb high inflation without triggering a downturn afterward.
Central banks worldwide are grappling with the challenge of taming inflation without tipping the global economy into recession. This delicate balancing act is known as engineering a "soft landing," a scenario where economic growth slows down but remains positive, preventing a sharp downturn.
Achieving a soft landing is a complex task, as raising interest rates to combat inflation can also dampen economic activity. If interest rates are raised too aggressively, businesses and consumers may struggle to borrow, leading to reduced spending and investment, ultimately triggering a recession.
While the path ahead remains uncertain, the recent economic indicators and expert perspectives offer a glimmer of hope for a soft landing. Central banks worldwide are carefully navigating the delicate balance between curbing inflation and sustaining economic growth. While the challenges are significant, there are reasons to believe that a soft landing may be achievable.
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