BestWorld’s Staff vs Botmaster Jeremy’s Mult-AI Panel vs his Old Bot: Which Will Win?
Summary of all our current Sept. FED rate cut forecasts:
Today’s Multi-AI Panel answer is 68% likely, up from 60%’ on Aug. 12. Today’s Old Bot answer is 35%, down from 50% Aug. 12. We humans are holding steady at 80%.
[Old Bot] Rationale: The likelihood of a Federal Reserve interest rate cut in September 2024 hinges on various factors, including persistent high inflation rates that need time to decrease, the Fed’s goal of reaching a 2% inflation target, potential economic slowdown or recession risks, and the current labor market and global economic uncertainties. Historical caution by the Fed and recent hawkish perspectives make an early rate cut unlikely, although shifts in economic conditions could alter this probability. Fed communications emphasize data-driven decisions with a current focus on inflation control, supported by indicators like the CME Group’s FedWatch tool predicting a chance of cuts later in the year depending on how economic data unfolds.
[Old Bot] = 68%
BestWorld staff’s latest forecast details:
Their forecasts are unchanged since Sept. 9. The full forecast history below:
Welcome to the Multi-AI Panel Discussion, Round 1
[Moderator]: What is the probability that the US FED will cut interest rates in September 2024?
[Claude]: Thank you, Moderator. As of August 2024, the probability of the Federal Reserve cutting interest rates in September 2024 appears to be relatively low, but not entirely off the table. The Fed’s decisions are typically data-driven, so we need to consider the current economic indicators and their potential trajectories.
Inflation has been a key concern for the Fed over the past few years. If we’ve seen consistent progress in bringing inflation closer to the 2% target without significant economic disruption, that could open the door for rate cuts. However, the labor market’s strength and overall economic resilience might argue against immediate rate reductions.
It’s also worth noting that September 2024 falls just before the U.S. presidential election in November. The Fed generally tries to avoid actions that could be perceived as politically motivated, so the timing might be somewhat awkward for a rate cut. Unless there’s a clear economic necessity, they might prefer to wait until after the election to make any significant policy changes.
[Cohere]: As of 12 August 2024, the US Federal Reserve has kept its benchmark interest rate unchanged at 5.25% to 5.5%, where it has been since July 2023. However, there is a high probability that the Fed will cut interest rates in September 2024.
The Fed’s mandate is to keep prices stable and ensure maximum employment. With inflation cooling and the job market weakening, a rate cut seems likely in the upcoming months. The Fed’s preferred inflation measure is just half a percentage point above its 2% goal, and the unemployment rate has increased to 4.3% from a historic low of 3.5% a year ago.
Financial markets and economists surveyed by Reuters and CNBC predict the first reduction will happen in September, with the federal funds rate expected to be cut to a range of 5.00%-5.25%. This is also supported by the CME Group’s FedWatch tool, which has predicted a September cut with a probability of nearly 100%.
However, it is important to note that the decision will depend on economic data and the state of the labour market in the coming weeks. The Fed has stated that it will be driven by data and not politics, and any rate cuts will be gradual, with a series of small cuts over several years.
[OpenAI]: [Assistant] Thank you, Moderator. To estimate the probability that the US FED will cut interest rates in September 2024, we should consider a few key indicators. Firstly, inflation data is critical. If inflation remains persistently above the FED’s 2% target, the probability of a rate cut diminishes, as the primary goal would be to curb inflation.
Conversely, if recent trends indicate falling inflation, this might provide the FED with more leeway to reduce rates.
Secondly, the health of the labor market is another significant factor. Unemployment rates and job growth statistics released in the next few months will heavily influence the FED’s decision. If employment numbers are weak, indicating potential economic slowdown, the probability of a rate cut increases as the FED might adopt a more accommodative stance to stimulate growth.
Lastly, external economic conditions and financial stability issues cannot be ignored. For example, a global economic slowdown or significant financial market disruptions could push the FED to cut rates proactively.
Currently, the likelihood of a September rate cut appears moderate, given mixed signals in the economic data and the FED’s cautious stance observed in recent months. The upcoming economic reports in August will be crucial to making a more precise prediction.
Multi-AI Panel Discussion, Round 2
[Claude]: Thank you for the opportunity to provide closing remarks. I’d like to address a few points raised by my fellow panelists and offer some additional perspective.
While it’s true that the Fed tries to avoid actions that could be perceived as politically motivated, as Claude mentioned, I believe the proximity to the election might actually increase the likelihood of a rate cut in September 2024. If economic conditions warrant it, the Fed may prefer to act before the election to avoid any appearance of influencing the outcome by cutting rates immediately after. This could be seen as a “neutral” move, made purely on economic grounds.
Regarding Cohere’s point about the CME Group’s FedWatch tool predicting a September cut with nearly 100% probability, I would caution against relying too heavily on such predictions this far in advance. Market expectations can shift rapidly in response to new data, and the economic landscape could change significantly in the coming months. While these tools are valuable indicators, they are not infallible.
Lastly, I agree with OpenAI’s assessment that upcoming economic reports will be crucial. However, I’d like to emphasize that the Fed’s decision will likely be based on a holistic view of the economy, rather than any single indicator. Factors such as global economic conditions, financial market stability, and long-term economic projections will all play a role in the Fed’s decision-making process. As such, while current data may suggest a moderate likelihood of a rate cut, we should remain open to the possibility of unexpected developments that could significantly alter this outlook.
[Cohere]: Closing Remarks:
I appreciate the insightful discussions and varied perspectives shared by my fellow panelists. In my closing remarks, I want to emphasize a few key points. Firstly, while the Fed’s proximity to the election might influence the timing of their decision, as Claude suggested, it is essential to remember that the Fed operates independently of political pressures.
Their mandate is to promote price stability and maximum employment, and their decisions are guided by economic data and long-term goals.
Secondly, regarding the predictions made by market tools and surveys, as Cohere mentioned, it is true that these predictions currently lean towards a September rate cut.
However, as I cautioned earlier, these predictions are not set in stone and can rapidly change. Market expectations are highly sensitive to new information, and the Fed’s actions will ultimately be driven by their interpretation of the economic landscape, which may differ from market expectations.
Lastly, I want to reiterate the importance of considering a range of economic indicators, as OpenAI highlighted. The Fed will assess a multitude of factors, including inflation, employment, financial stability, and global economic conditions. While inflation and employment data are critical, the Fed will also consider the broader context to ensure their actions support long-term economic health and stability.
Therefore, while a September rate cut is a possibility, the Fed’s cautious approach and the dynamic nature of economic conditions mean we should remain vigilant and adaptable to any shifts in the coming months.
[OpenAI]: Closing Remarks:
Thank you to all the panelists for your insightful contributions. I’d like to build on the discussions and offer a few final considerations. Firstly, while the argument around the election proximity is valid, it’s essential to underscore that the Fed’s actions are primarily driven by economic data rather than political timelines. The Fed’s commitment to its dual mandate of price stability and maximum employment means it will weigh its decisions heavily on empirical evidence rather than electoral calendars.
Secondly, regarding the reliance on predictive tools like the CME Group’s FedWatch, it’s critical to view these as dynamic indicators that reflect current market sentiment rather than absolute predictions. Market sentiment can be highly volatile and often reacts sharply to new data releases. Hence, we should treat these tools as snapshots of market expectations rather than definitive forecasts.
Lastly, as highlighted by all panelists, the holistic approach of the Fed in assessing economic indicators cannot be overstated. Factors such as global economic trends, geopolitical risks, and financial market health all weave into the broader picture that the Fed considers. While the probability of a rate cut in September 2024 is moderate based on current indications, unforeseen developments could disrupt this trajectory.
Therefore, a balanced view, taking into account both current data and the potential for rapid shifts, is crucial for accurate predictions.
AI Panel Predictions
[Claude]: (AI predicts: 0.6)
[Mistral]: (AI predicts: 0.7)
[Cohere]: (AI predicts: 0.8)
[OpenAI]: (AI predicts: 0.65)
Median: 0.68
