# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Hard Landing

Written By
Paul Tracy
Updated January 16, 2021

What is a Hard Landing?

A hard landing refers to an abrupt downward shift in economic growth resulting from monetary policy.

How Does a Hard Landing Work?

Inflation historically accompanies periods of economic expansion. In the U.S., the Federal Reserve has an obligation to control inflation through monetary policy, specifically via adjusting short-term interest rates and conducting open market operations.

A hard landing can occur when a central bank raises rates excessively during a period of economic expansion. The consequent increase in interest rates places downward pressure on the demand for new loans. Companies experience a slowdown in growth and consumer confidence falls, causing the economy to contract quickly in a short amount of time.

Why Does a Hard Landing Matter?

Monetary policymakers generally try to circumvent hard landings by making incremental rate adjustments small enough to maintain consistent price levels without disturbing upward growth.

Ask an Expert about Hard Landing
At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Hard Landing.
Be the first to ask a question

If you have a question about Hard Landing, then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Hard Landing, then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Hard Landing

By submitting this form you agree with our Privacy Policy

Share
close
Don't Know a Financial Term?
Search our library of 4,000+ terms