Chances of “soft landing” for U.S. economy are growing

As it was stated by Federal Reserve Vice Chair Lael Brainard, there’s a possibility for the U.S. economy to have a “soft landing.” The country’s central bank is currently estimating a necessary level of interest rates that might bring inflation under control without decreasing the rate of employment.

During her speech at the University of Chicago's Booth School of Business, Brainard said that a decline in inflation was registered over the recent months amid a moderate pace of economic growth. She also mentioned several factors indicating a slowdown in the economy, among which she noted significant weakening in the manufacturing sector and a decline in consumer spending.

In 2022, the Federal Reserve delivered a rapid hike of the benchmark overnight interest rate. The rate was near-zero in March and then was increased to the current levels of 4.25%–4.50%. This act was aimed at curbing inflation that hit 40-year highs.

According to Brainard’s statement, the rate is now in the restrictive territory, and the central bank is trying to find balance and create the conditions needed for inflation to go back down to the Fed's target level of 2%.