Deutsche Bank’s Chief US Economist Matthew Luzzetti has a message for the Federal Reserve: you’ve overshot. According to Luzzetti, the current federal funds rate sits roughly 100 basis points below where standard monetary policy frameworks, like the Taylor rule, suggest it should be.

The math behind the critique

The Federal Reserve cut its target range by 25 basis points on December 10, 2025, bringing it down to 3.5%-3.75%. That move was the latest in a series of quarter-point reductions that have defined the Fed’s easing trajectory over recent months.

Luzzetti’s own projections suggest neutral rates, the theoretical sweet spot where monetary policy neither stimulates nor restricts the economy, should hover near 3.25%-3.5% by late 2025 or early 2026. The problem, as he sees it, is that the Fed isn’t just easing toward neutral. It’s blowing past it.

Fed minutes from late 2025 indicate additional easing is on the table heading into 2026, with the benchmark rate potentially reaching a terminal range around 3%. If Luzzetti’s analysis holds, that would push the gap between actual policy and recommended policy even wider.

What this means for crypto investors

Crypto-native outlets have largely ignored Luzzetti’s remarks. The digital asset space has historically been slow to price in macro signals until they become impossible to ignore, at which point the reaction tends to be sharp and unforgiving.

No direct connections between Fed easing commentary and cryptocurrency market responses were identified in available reports, underlining a gap in the linkage between conventional monetary policy critiques and cryptocurrency performance.

The Fed’s next few meetings will be critical. If projections continue pointing toward a 3% terminal rate while economists like Luzzetti argue for something closer to 4%-4.75%, the tension between market positioning and policy reality will only grow.