Hard or soft landing?

Frédéric Boissay, Fiorella De Fiore and Enisse Kharroubi

No 59, BIS Bulletins from Bank for International Settlements

Abstract: Inflation is now at its highest level in several decades and threatens to become entrenched. Whether inflation is demand- or supply-driven, central banks have little choice but to tighten policy to lower aggregate demand and bring inflation back to target. Evidence from past tightening cycles suggests that strong growth and high job vacancies, as well as front-loaded rate hikes, can help prevent a hard landing. But rapidly increasing inflation, low term spreads and elevated debt levels raise the risk of a recession, particularly in the face of persistent negative supply shocks. Central banks need to steer a narrow course between tightening too much or too quickly, which could precipitate a hard landing, and tightening too little or too late, which could lead to inflationary pressures becoming ingrained, necessitating more costly measures down the road.

Pages: 9 pages
Date: 2022-07-14
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.bis.org/publ/bisbull59.pdf Full PDF document (application/pdf)
https://www.bis.org/publ/bisbull59.htm (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:bisblt:59

Access Statistics for this paper

More papers in BIS Bulletins from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().