DEFINITION of 'Soft Landing'

A term used to describe a rate of economic growth high enough to avoid recession, but slow enough to avoid high inflation. A soft landing is typically defined as an economy that has avoided a strong contraction, often made evident by recessionary events, through government intervention by way of fiscal or monetary policies, in many cases.

BREAKING DOWN 'Soft Landing'

For example, if the U.S. economy is growing at strong rate, the Fed may try to engineer a soft landing by raising interest rates enough to slow the economy down, while being sure not to slow the growth to the point of economic contraction. During the 1990s many economic pundits considered Alan Greenspan, the former chairman of the Federal Reserve Board, as a master of engineering a soft landing.

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