American economists are scratching their heads in confusion. The Fed’s aggressive rate hikes hasn’t produced the outcome many expected. Instead of recession and massive layoffs, the US economy now looks tantalisingly close to a fabled “soft landing” with the jobs market remaining resilient, and inflation tumbling. The unique set of circumstances of the post-pandemic US economy have perplexed almost everyone. The Fed's latest rate rise could now be the last for a while. What can this rate hike cycle teach us about interest rates and the US economy?

On this week’s podcast, hosts Mike Bird, Alice Fulwood, and Tom Lee-Devlin examine how interest rates and policy transmission have functioned in the post-covid US. The Economist’s US Economics Editor Simon Rabinovitch explains why economists across the board have had their expectations confounded. Founder of Macropolicy Perspectives Julia Coronado lays out the key lessons from this unusual rate hike cycle. And former Fed governor Frederic Mishkin tells us why he thinks recession is still a likelihood for the US economy.

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