It appears quite likely that developed countries will frequently find themselves with interest rates stuck at the zero lower bound (ZLB) in coming decades. Indeed, the Eurozone never truly left the ZLB after the Great Recession, and the United States left in 2015 but returned to the ZLB during the COVID-19 recession. Financial markets forecast, however, that the US will leave the ZLB in 2022 as the Fed is expected to raise its policy rate multiple times. Nonetheless, it seems highly probable that the US will hit the ZLB in the whatever the next economic crisis may be. As a base rate, the US had two zero lower bound episodes in the last 50 years -- both of which were in the last 15 years.
After 2022, how many times will the US policy rate reach the zero lower bound?
The question resolves on January 1, 2050, depending on the number of ZLB episodes between 2023 and 2049 (inclusive). A single “ZLB episode” is defined as beginning when the policy rate is first set less than 0.25%; and is defined as ending when the policy rate rises above 0.50%. This information is taken from (e.g.) the press releases available on the Federal Reserve’s website.
The current policy rate of the Federal Reserve is the federal funds rate, but this may change by the time of the resolution criteria.
If the Fed specifies a range for the policy rate, then this resolves on the date that any part of the range is strictly less than 0.25%.