(July 5 – 09:50 ET) – CIBC says the U.S. Federal Reserve has apparently engineered a soft landing for the U.S. economy, without disrupting the global recovery.

CIBC says global growth will fall to about 3% in 2001, from more than 3.5% this year. The U.S. is expected to slow to 2.7% in 2001, from 4.7% this year. Canada is expected to match the U.S. this year, slipping to 3% in 2001.

“By working to contain inflationary pressures, the Federal Reserve’s actions are actually aimed at ensuring that the record U.S. expansion continues,” says Joshua Mendelsohn, CIBC chief economist. “Unless checked, the momentum of the U.S. economy, coupled with better synchronized growth of economies in Europe and Asia, aside from Japan, could result in a buildup of inflationary pressures. Although we have seen some signs of slowing in the U.S., the economy remains robust and the Federal Reserve will need to remain vigilant. There is still a strong probability of another 25 to 50 basis point increase in the Federal Reserve funds’ rate in August.”

Everyone will benefit from the Fed’s skill says CIBC, not least of all its biggest trading partner, Canada. “With slower U.S. growth now, there is a much better chance that Canada’s own expansion will not be shortened by a steep escalation of interest rates,” says CIBC deputy chief economist, Alister Smith.