TechFlow, on August 20, according to Jinshi Data, Deutsche Bank interest rate strategists said U.S. Treasury Secretary Bessent was wrong in his view that the Federal Reserve's interest rates are more than one percentage point higher than the level suggested by models.
Bessent previously stated that "regardless of the model," it implies rates "should be 150 to 175 basis points lower." However, subsequent searches for any model supporting this claim have yielded no results, and a team of Deutsche Bank strategists led by Matthew Raskin has recently joined this verification effort.
Raskin, who formerly served as an economist and advisor at the Federal Reserve, and his team said in a report on Tuesday that the rule used by the Fed in its semiannual monetary policy report "does not clearly point to a need for rate cuts, let alone cuts of 150 to 175 basis points." They added: "It should be noted that the current federal funds rate falls precisely within a relatively narrow range prescribed by the rule," roughly between 4% and 4.65%, suggesting a 25-basis-point cut "could be reasonable."
