Deutsche Bank says that US Treasury Secretary Besent's interest rate cut perspective contradicts the Federal Reserve's model.

The interest rate strategist of Deutsche Bank stated that Treasury Secretary Scott Bensent's view that the appropriate level of Fed interest rates is more than one percentage point higher than what models suggest is incorrect. Benson said on August 13th that "whatever model" indicates that rates "should be lowered by 150, 175 basis points." However, a search for models that support this claim has been unsuccessful, and Matthew Raskin's team at Deutsche Bank, who are leading the verification efforts, have recently joined in. Raskin, a former Fed economist and advisor, and his team wrote in a report on Tuesday that the rules used by the Fed in its semi-annual monetary policy report "do not clearly point to a rate cut, let alone a cut of 150 to 175 basis points". They stated, "It should be pointed out that the current federal funds rate is exactly within the relatively narrow range defined by the rules", roughly between 4% and 4.65%, suggesting that a rate cut of 25 basis points "might be reasonable."