Definition
When higher interest rates slow the economy so much that it tips into a recession.
The story
It's the opposite of a soft landing. The Fed raises rates to cool inflation; if it overdoes it, or the economy turns out more fragile than expected, businesses cut back, layoffs rise and growth shrinks.
Why markets watch it
Whether the Fed can avoid a hard landing is a recurring question in market coverage whenever it's raising rates.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms