The Fed could pull off a soft landing, here’s what that means for you

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The likelihood of a soft landing is extremely high, says Rockland's David Smith

The Federal Reserve is expected to announce it will leave rates unchanged at the end of its two-day meeting this week after recent signs the economy is in fairly good shape and as inflation continues to drift lower.

“While there’s been talk about an imminent recession going back to early last year, the U.S. economy has remained substantially more resilient than expected,” said Mark Hamrick, senior economic analyst at Bankrate. 

“A soft landing appears to be the greatest likelihood for next year,” he said. However, the economy isn’t out of the woods just yet, Hamrick added, and “a mild and short recession can’t totally be ruled out.”

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Even though inflation is still above the central bank’s 2% target, markets have already been pricing in the likelihood that the Fed is done raising interest rates this cycle and is now looking toward potential rate cuts in 2024.

For consumers, that means relief from high borrowing costs — particularly for mortgages, credit cards and auto loans — may finally be on the way as long as inflation data continues to cooperate.

And yet, “continued slowing in inflation doesn’t mean price decreases, it means a price leveling,” said Columbia Business School economics professor Brett House.

Hope for a ‘softish’ landing

Fears of a hard landing

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