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Briefing
Of Soft, Hard and Aborted Landings
In this article, we compare two rate cycles from the 1980s (one of which resulted in a soft landing) with our current rate cycle. We describe the type of landing that resulted from each rate cycle through changes in the federal funds target rate, inflation, unemployment and consumption growth. Importantly, since monetary policy is not carried out in a vacuum, we underscore the importance of external shocks in affecting the economy and, ultimately, in determining (along with monetary policy) the rigidity of the landing.