Monetary Policy Tightening and Economic Landing: Will the landing be hard or soft?
Published: December 2022
This article presents a new approach for estimating the optimal nominal interest rate and labels it the appropriate-FFR. The analysis suggests that the US Federal Reserve is behind the curve in the present cycle and also predicts a hard landing using both the FOMC and Blue Chip consensus forecasts. Given the historical accuracy of our method, we caution decision makers to consider the possibility of a hard landing in the near future.