Will the Fed’s lower bound reach 0.5% or lower before 2027?

The Fed's lower bound reaching 0.5% or lower before year-end 2026 is priced at just 5%, reflecting market conviction that the central bank will maintain higher rates given persistent inflation concerns. Jerome Powell's hawkish communications and recent resilient economic data support this bearish view on major rate cuts. The nearest catalysts are FOMC meetings and inflation readings through December 2026, with any acceleration in disinflation the primary path to triggering the dramatic cuts needed to hit this level.