<p>According to the Wisdom Financial APP, since the beginning of 2022, the decision-makers led by Jerome Powell, the Chairman of the Federal Reserve, have been attempting a challenging task: to raise interest rates to alleviate price pressures while avoiding an economic recession - a state known as a &#34;soft landing&#34; by economists. Although there have been few cases in history where this goal has been achieved, with the decline in inflation rates and continued economic growth, economists both inside and outside the Federal Reserve are gradually beginning to believe that decision-makers may succeed this time.</p>
<p>However, the unexpected decline in employment data announced in early August, coupled with subsequent global market turmoil, has raised doubts in the market about whether the Federal Reserve will feel pressure and therefore cut interest rates more aggressively than originally planned to avoid a hard economic landing.</p>
<h2>1. Definition of a Soft Landing</h2>
<p>A soft landing refers to the central bank successfully slowing down economic growth by moderately adjusting monetary policy to suppress demand, guiding the inflation rate to the target level (2% for the Federal Reserve), while avoiding a significant economic downturn and a sharp increase in the unemployment rate. Achieving this requires precise policy-making and a certain amount of luck.</p>
<h2>2. Has the Federal Reserve Achieved This Goal Before?</h2>
<p>Historically, the Federal Reserve only achieved this goal during the period of 1994-1995, under the leadership of Alan Greenspan, by doubling interest rates to 6%, achieving a slowdown in economic growth without leading to an economic recession, although this process was accompanied by credit tightening and some adverse consequences. The tightening effect of this policy had a significant financial impact on bond market investors, with far-reaching consequences, even triggering the bankruptcy of Orange County, California in 1994. Similarly, the Mexican economy was also severely affected by the sharp fluctuations, having to request emergency financial assistance from the U.S. government and the International Monetary Fund to stabilize its economic situation.</p>
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<h2>3. Other Successful Cases</h2>
<p>Not all attempts end in failure. For example, Alan Blinder, Vice Chairman of the Federal Reserve in 1994-95, pointed out that in the past fifty years, the Federal Reserve has achieved several &#34;quite soft&#34; landings. The 2001 economic recession was one of them, when the Federal Reserve, through a two-year early rate hike, successfully controlled the economic recession within a very mild eight-month period.</p>
<h2>4. Possibility of a Soft Landing This Time</h2>
<p>Currently, the likelihood of achieving a soft landing seems high, but the rapid slowdown in the labor market brings risks. The inflation rate has dropped significantly from 9.1% in June 2022 to 3.0% in June 2024, and although the unemployment rate has risen to 4.3%, it is still at a historical low
The economists at the Federal Reserve withdrew their prediction of a mild recession for the economy in the previous year. Meanwhile, independent economists have also reassessed their views. According to a survey in July, economists participating in the survey generally believe that there is a 30% probability of the United States experiencing a recession in the next 12 months. However, considering recent signs of weakness in the job market, economists at Goldman Sachs have raised their prediction of the possibility of a recession in the United States in the next year from 15% to 25%, reflecting increased concerns about the economic outlook.</p>
<h2>5. Future Challenges</h2>
<p>Despite strong economic growth in 2023, economic growth and the labor market significantly slowed down after entering 2024, making the economy more vulnerable to external shocks. In addition, the impact of the recent rate hikes by the Federal Reserve has not fully materialized, and the rising borrowing costs for households and businesses may become new challenges. Families relying on savings to sustain consumption during times of high inflation are now facing a harsh reality: they must pay increasingly soaring high interest rates on credit card debts. Meanwhile, businesses are also feeling the pressure as debts accumulated during the pandemic come due, and borrowing costs rise significantly. Although Federal Reserve Chairman Powell has expressed confidence in achieving an economic soft landing, he told reporters on July 31, &#34;Of course, our work is far from over. We are closely monitoring the economic trends.&#34; This reflects policymakers' continued attention to and cautious attitude towards the economic outlook.</p>
<h2>6. Powell's Strategy</h2>
<p>Powell has been preparing for rate cuts in September and beyond, although some market participants believe that the Federal Reserve should cut rates more aggressively. The Fed's plan is to gradually lower interest rates as inflation falls, providing support to the economy without triggering new price pressures. After the release of July's employment data, market sentiment became tense and uneasy, with the decline in U.S. and global stock markets reflecting this sentiment. This market dynamic may add complexity to Powell's task. Some investors, in response to this instability, are calling for the Fed to take emergency action to lower rates immediately, rather than waiting until September as originally planned.</p>
<h2>7. Possibility of Emergency Rate Cuts</h2>
<p>This situation is not common and does not meet the expectations of those urgently calling for it. Under Powell's leadership, the core policy-making body of the Federal Reserve—the Federal Open Market Committee (FOMC)—has historically only implemented large-scale policy adjustments in the face of truly emergency situations. For example, in March 2020, the unprecedented impact of the COVID-19 pandemic on the U.S. economy prompted a swift response from the FOMC, which sharply cut the benchmark interest rate by 1.5 percentage points until it reached near-zero levels. In 2022, faced with a sharp rise in inflation, the FOMC took rate hike measures of 50 and 75 basis points respectively.</p>
<p>These drastic policy fluctuations are usually seen as aggressive responses to emergency situations. However, many economists closely monitoring the Federal Reserve believe that the July employment market data does not pose a sufficient threat to prompt the Fed to take such drastic action. Federal Reserve officials have also consistently emphasized that they prefer to base their policies on long-term economic trends rather than short-term fluctuations in a single economic report
In conclusion, despite the challenges on the road to achieving an economic soft landing, the Federal Reserve and market economists are closely monitoring economic indicators in hopes of finding a balance between controlling inflation and supporting economic growth</p>

<p>Federal Reserve Chairman Powell is under pressure from an economic downturn, with the market calling for an emergency rate cut. In the past, only during the 1994-1995 period, the Federal Reserve successfully achieved economic growth slowdown through rate hikes without leading to an economic recession. The realization of the soft landing target this time still faces uncertainties</p>

Market panic triggered by recession fears, urgent rate cut calls, how will Jerome Powell break the deadlock?