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 whenever the next economic crisis may be.
After 2022, when is the next time the US policy rate will reach the zero lower bound?
The question resolves on the date (after January 1, 2022) when the target policy rate set by the Federal Reserve is set less than or equal to 0.25%; or by January 1, 2050, whichever comes first. This information is taken from (e.g.) the latest press release 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%.