Deutsche Bank strategists led by former Federal Reserve economist and advisor Matthew Raskin observed that a rate cut is still not called for based on the central bank’s half-yearly monetary policy report.
Deutsche Bank strategists on Tuesday reportedly said in a recent note that Treasury Secretary Scott Bessent’s view that the interest rate should be 150 basis points to 175 basis points lower than it is right now is wrong.
According to a Bloomberg report, Deutsche Bank strategists led by former Federal Reserve economist and advisor Matthew Raskin observed that a rate cut is still not called for based on the central bank’s half-yearly monetary policy report.
“The main point to note is that the current funds rate falls squarely within the relatively narrow range of rule prescriptions,” the strategists said in the note, according to the report. This narrow range falls within the 4% to 4.65% range, the note said, while adding that a quarter-point cut (25 basis points) “could be warranted.”
This comes after Bessent said last week that interest rates are “too constrictive,” reiterating President Donald Trump’s calls for the central bank to cut rates. The central bank has kept interest rates unchanged in the 4.25% to 4.5% range after slashing them by a cumulative 100 basis points between September and December 2024.
Bessent said he expects the central bank to cut rates by 50 basis points. “There’s a very good chance of a 50 basis point rate cut. We could go into a series of rate cuts here, starting with a 50 basis point rate cut in September,” he added.
Meanwhile, U.S. equities declined in Wednesday’s midday trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.55%, while the Invesco QQQ Trust (QQQ) fell 1.25%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.
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