The US Federal Reserve may feel a little smug this week as its interest rate setting committee meets for the last time before the summer break. Annual inflation in America slowed to just 3 per cent in June, the lowest since March 2021. It has dropped below even the traditionally inflation-challenged Japan, where price growth has hit 3.3 per cent. Perhaps more impressive is that joblessness has barely increased and the odds of a recession are falling, despite the Fed’s aggressive 500 basis points of rate rises over the past 18 months.

Can chair Jay Powell really pull-off an “immaculate disinflation” of the US economy? If he did, it would make him one of the more successful Fed chiefs. Even the lauded Paul Volcker — who famously pushed interest rates up to 19 per cent in the early 1980s — ended up propelling US unemployment to its then highest since the Great Depression.

Goldman Sachs now only sees a 20 per cent chance of a US recession over the coming year. Economic activity is resilient. This month consumer sentiment reached a near two-year high. Markets are expectant too. A swath of US stocks, not just tech firms, have rallied. But a “soft landing” — when inflation is brought down without triggering a significant downturn — is far from guaranteed.