Analysis: The Treasury Secretary's view on interest rate cuts contradicts the Federal Reserve's model

ChainCatcher news, according to Deutsche Bank interest rate strategists, U.S. Treasury Secretary Basant'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. Basant previously stated that "whatever the model," suggests that rates "should be 150 to 175 basis points lower." However, the search for models that support this claim has consistently yielded no results, and the Deutsche Bank strategist team, led by Matthew Raskin, has recently 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 semiannual monetary policy report "do not clearly indicate that rates should be lowered, let alone by 150 to 175 basis points."

They noted, "It is important to point out 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."