PremiumDeutsche Bank’s chief US economist, Matt Luzzetti, has published a good short piece (available here for pro subs), suggesting that the Fed is now "overinsured."To show this he has looked at a range of standard policy rules – including the Taylor rule, a “balanced approach” rule (slightly different weights), and the first-difference rule (which looks at changes over absolute levels).
"Overinsured": Why The Fed Funds Rate Is 100bps Too Low
Across a range of rules and neutral rate assumptions, the funds rate appears to be roughly 50–160bps below what these frameworks would suggest.







