Why Fed Aim Is ‘Growth Recession,’ a Not-Soft Landing

Federal Reserve Chair Jerome Powell and his colleagues are trying to use higher interest rates to bring down sky-high inflation without crashing the US into a recession. Their initial goal was what economists call a soft landing, but that’s become harder since Russia’s invasion of Ukraine set off shocks in global energy, commodity and financial markets. Powell now seems to be aiming instead for something more painful that’s known by the paradoxical name of a “growth recession.”

It’s when a central bank can slow the economy enough to curb demand and rein in inflation, but not so much as to trigger a contraction in gross domestic product and a rise in unemployment. Doing that takes a combination of smart policy making and luck.