The challenge of achieving a soft landing for the US economy

Raghuram Rajan, former governor of the Reserve Bank of India, discusses the difficulty of achieving a soft landing for the US economy. He emphasizes the danger of central banks staying with accommodative policies for a prolonged period, which leads to market participants taking on excessive risk and borrowing more than they should. Rajan suggests that central banks should avoid providing long-term forward guidance and strive for unpredictability to prevent market complacency and prepare for unexpected changes. He notes that central banks may need to change the terms of the bargain when their view of the future doesn't align with reality.