What is a soft landing?
You’ve likely heard the term “soft landing” in the news. Find out how it happens and why it is different from a recession.
Why are mortgages so expensive in Canada?
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A soft landing is when a recession does not occur after a country’s central bank raises interest rates (in Canada, that is the Bank of Canada, often referred to as the BoC). Raising rates reduces economic activity and often leads to negative economic growth. Two consecutive quarters of negative growth is a common definition of a recession. If rates go up and this doesn’t happen, it’s considered a soft landing, a preferable outcome to a recession.
Example: “After a long period of low rates, the Bank of Canada began raising rates in March 2022 to curb inflation. Economists were hopeful we’d see a soft landing, without the high unemployment, reduced consumer spending and declining business activity of a recession.”
Read more about the economy:
- Canada’s inflation rate slowed to 5.2% in February 2023. When will it return to normal?
The Consumer Price Index shows inflation is starting to cool. How did it get so high, and what does it mean for your investments? - How to prepare for a recession
Your best defence against a recession is to follow some basic principles: Save up for emergencies, diversify your holdings, and sharpen your resume. - 2022’s year in review: The financial highs, lows and what’s in store for 2023
A recap of the ups and downs investors and the markets dealt with in 2022 and a hint of what may be in store for them in 2023. - How recession fears are shaping investor behaviour and emotions
In the first quarter of 2023, investors wrestled with fast-changing market conditions. Here are some takeaways and tips on where to invest. - Does TINA still apply for the stock market? Are GICs and bonds a new option for Canadian investors?
Here’s why it’s still true that there’s no alternative (TINA) to investing in the stock market if you want to grow your wealth, even as interest rates rise.
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