Analysis: US Treasury Secretary's Rate Cut Stance Contradicts Fed's Model
BlockBeats News, August 20th, a Deutsche Bank interest rate strategist stated that the U.S. Treasury Secretary Yellen's view on the appropriate level of the Fed rate compared to the model is wrong by more than one percentage point. Yellen previously stated that "no matter what model," the rate "should be lowered by 150 to 175 basis points." However, subsequent searches for a model that supports this statement have been unsuccessful, and the Deutsche Bank strategist team led by Matthew Raskin recently joined this verification effort.
Former Fed economist and advisor Raskin and his team, in a report on Tuesday, stated that the rule used by the Fed in its semi-annual monetary policy report "does 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 specified by the rule," roughly between 4% and 4.65%, which suggests that a 25-basis-point rate cut "may be reasonable." (FXStreet)
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