According to ChainCatcher, Deutsche Bank interest rate strategists believe that U.S. Treasury Secretary Bessen's view that the Federal Reserve's interest rates are more than one percentage point higher than the appropriate level indicated by models is incorrect. Bessen had previously stated that "whatever the model," it implies that interest rates "should be lower by 150 to 175 basis points." However, the search for models supporting this claim has been fruitless, and recently, a team of Deutsche Bank strategists led by Matthew Raskin has also joined this verification effort.
Raskin, a former Federal Reserve economist and advisor, and his team stated in a report on Tuesday that the rules used by the Federal Reserve in its semi-annual monetary policy report "do not clearly indicate that interest rates should be lowered, let alone by 150 to 175 basis points."
They stated: "It should be noted that the current federal funds rate is precisely within the relatively narrow range specified by the rules," which is roughly between 4% and 4.65%, indicating that a 25 basis point cut "may be reasonable."