BestWorld’s Staff vs Botmaster Jeremy’s Mult-AI Panel and his Old Bot: Which will win?
Summary of all of today’s FED rate forecasts:
Today’s Multi-AI Panel answer is 75% likely, up from yesterday’s 45%. Today’s Old Bot answer is 55%, up from yesterday’s 50%. The staff are at 79%, up from 76.5%.
BestWorld’s staffs’ rationales below. The number following each forecaster’s name is his or her point probability estimate as of today. The overall probability is based on their joint history of forecasting this question.
2-August-2024 [Brian] 0.8 https://www.wsj.com/public/resources/documents/GzaPZ1aWJEcAYJ13FB0l-WSJNewsPaper-8-2-2024.pdf. Employment dropped. Unemployment increased. FED needs to act before election. Stock market thinks FED has acted too slow and economy is close to recession.
3-August-2024 [Carolyn] 0.91 Reducing for the possibility of a reduction before the next scheduled meeting given that the Sahm Rule triggered today.
Old Bot’s Rationale:
The likelihood of the US Federal Reserve cutting interest rates in September 2024 depends on multiple factors including current inflation trends, economic growth projections, labor market conditions, and global economic pressures. While recent statements from Fed officials suggest a cautious approach, easing inflation and economic slowdown could prompt a rate cut. Historical patterns and various economic indicators, such as GDP growth and unemployment rates, also play a role. A consensus among economists and market analysts suggests a high probability of a rate cut, but the final decision will depend on forthcoming economic data and potential unforeseen shocks.
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All past forecasts:
https://bestworld.net/updates-from-bestworlds-ai-botmaster-jeremy-lichtman-of-aug-1-2024
https://bestworld.net/updates-from-bestworlds-ai-botmaster-jeremy-lichtman-of-july-31-2024
https://bestworld.net/updates-from-bestworlds-ai-botmaster-jeremy-lichtman-of-july-30-2024
https://bestworld.net/updates-from-bestworlds-ai-botmaster-jeremy-lichtman-of-july-29-2024
https://bestworld.net/updates-from-bestworlds-ai-botmaster-jeremy-lichtman-of-july-26-2024
https://bestworld.net/updates-from-bestworlds-botmaster-jeremy-lichtman-7-25-2024
https://bestworld.net/updates-from-botmaster-jeremy-lichtman
https://bestworld.net/daily-updates-from-bestworlds-botmaster-jeremy-lichtman
https://bestworld.net/bestworlds-multi-ai-panel-vs-humans-experiment
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?
AI Panel Discussion Round 1
[Claude]: Thank you, Moderator. Regarding the probability of the US Federal Reserve cutting interest rates in September 2024, I believe it’s important to consider several factors that could influence this decision.
Firstly, we need to look at the current economic landscape and projections for the coming year. As of now, the Fed is still focused on bringing inflation down to its 2% target. If inflation continues to moderate and approaches this target by mid-2024, it could create room for rate cuts. However, if inflation proves sticky or economic growth remains robust, the Fed may be hesitant to cut rates.
Additionally, we should consider the broader global economic context and potential geopolitical events that could impact the US economy. Factors such as international trade tensions, energy prices, and global financial stability could all play a role in the Fed’s decision-making process. It’s also worth noting that September 2024 falls just before the US presidential election, which could add an extra layer of complexity to the Fed’s considerations as they strive to maintain their political independence.
[Cohere]: The probability of the US Federal Reserve cutting interest rates in September 2024 is high.
The Federal Reserve raised interest rates in July 2023 to combat inflation, which had peaked at 9.1% in June 2022. Since then, inflation has been steadily decreasing, reaching an annual rate of 3% in June 2024, the lowest in three years. This has led to expectations that the Fed will cut interest rates in the second half of 2024.
Various sources, including financial data companies and economists, predict that the first interest rate cut will occur in September 2024. For instance, CME FedWatch, a tool that measures the probability of rate adjustments, has predicted a September cut with nearly 100% probability. Additionally, nearly two-thirds of 108 economists surveyed by Reuters in May 2024 also predicted a September cut.
The Federal Reserve’s decision will depend on economic trends and data, including inflation and employment numbers. While there is a high probability of a September rate cut, the Fed has indicated that it wants to see more positive data and progress toward its 2% inflation target before making any cuts.
[OpenAI]: [Assistant] Thank you. The probability of the US Federal Reserve cutting interest rates in September 2024 largely hinges on numerous factors, including the state of the US economy, inflation trends, employment rates, and global economic conditions. Historically, the Federal Reserve has based its interest rate decisions on its dual mandate of promoting maximum employment and maintaining stable prices. Therefore, if the US economy exhibits signs of weakening, with declining growth rates and higher unemployment, the probability of a rate cut increases as the FED may seek to stimulate economic activity.
Current inflationary trends also play a pivotal role in this decision. If inflation is significantly above the Federal Reserve’s 2% target, it is less likely that a rate cut will occur.
Conversely, if inflation pressures ease, a rate cut might be more plausible to help sustain economic momentum. Moreover, the actions taken by other central banks worldwide and geopolitical factors can influence the Fed’s decisions, as the US economy does not operate in isolation.
Lastly, it’s important to consider the political landscape, particularly as 2024 is a presidential election year. Political pressures and economic uncertainties associated with the election could lead the Federal Reserve to take a more cautious approach.
Therefore, while it is difficult to predict with absolute certainty, the probability of a rate cut in September 2024 will ultimately depend on a complex interplay of domestic economic indicators and broader global economic dynamics.
Multi-AI Panel Discussion, Round 2
[Claude]: Thank you for the opportunity to provide closing remarks. I’d like to build on the points made by my fellow panelists and offer some additional considerations.
While the probability of a rate cut in September 2024 seems high based on current projections and market expectations, it’s crucial to remember that economic conditions can change rapidly. The Federal Reserve has consistently emphasized its data-dependent approach, meaning that unforeseen economic developments could significantly alter the trajectory of monetary policy. For instance, if we were to experience unexpected shocks to the economy, such as a resurgence of inflation or a sudden economic downturn, the Fed’s calculus could shift dramatically.
Moreover, I’d like to highlight the importance of the Fed’s forward guidance and communication strategy. The Fed has been increasingly transparent about its intentions, often signaling potential policy shifts well in advance. As we approach September 2024, it will be essential to closely monitor the language used in FOMC statements, minutes, and speeches by Fed officials for any hints about their intentions. Any shift in tone or emphasis could provide valuable insights into the likelihood of a rate cut.
Lastly, while the proximity to the presidential election has been mentioned, I’d like to emphasize that the Fed’s decision-making process is designed to be independent of political considerations. However, the heightened scrutiny during an election year could potentially influence how the Fed communicates its decisions, even if it doesn’t alter the decisions themselves. This could add an extra layer of complexity to interpreting the Fed’s signals in the lead-up to September 2024.
[Cohere]: I appreciate the opportunity to provide some closing thoughts on this topic. While the probability of a rate cut in September 2024 is indeed difficult to predict with absolute certainty, I believe we can make an informed assessment by considering the Federal Reserve’s mandate, economic indicators, and their recent track record.
Firstly, the Fed’s dual mandate of promoting maximum employment and stable prices remains a key framework for their decision-making. With inflation trending downwards and approaching their target, this certainly increases the likelihood of a rate cut, as my fellow panelists have mentioned. However, we must also consider the employment side of the mandate. If employment rates remain robust and unemployment is low, the Fed may be less inclined to cut rates as it could potentially overheating the economy and fueling inflationary pressures once again.
Secondly, while the Fed’s independence is crucial, we cannot ignore the potential influence of the upcoming presidential election. The Fed will likely want to avoid any perception of political interference, and so a more cautious approach, with a strong emphasis on data dependency, is probable. This could mean that any rate cut may be relatively modest, with the Fed aiming to balance economic stimulus with political neutrality.
[OpenAI]: [Assistant]: Thank you, panel, for the insightful discussion. I’d like to add a few critical considerations to round out our debate on the probability of the Federal Reserve cutting interest rates in September 2024.
First, while our projections highlight a leaning towards a rate cut provided inflation continues to stabilize, it’s important to also factor in the resilience of the labor market. Strong employment figures and wage growth can offset the case for rate cuts if they signal an overheating economy. Therefore, alongside inflation metrics, labor market trends between now and next September will be key indicators to watch.
Additionally, we should not overlook the potential impact of global economic conditions on the Fed’s decision-making. Events such as China’s economic policy shifts, European Central Bank’s actions, and geopolitical tensions, for example, in regions like Ukraine or Taiwan, could have significant ripple effects on the US economy. Such scenarios could sway the Fed’s calculus towards either tightening or easing monetary policy depending on their implications for US economic stability.
In conclusion, while there is a stronger leaning towards a possible rate cut in September 2024 based on current trends and expert predictions, unforeseen economic shocks or substantial deviations in key indicators such as employment or international events may necessitate a reassessment of this outlook. As always, the Federal Reserve’s decisions will reflect a balance of maintaining economic stability amidst evolving domestic and global factors.
AI Panel Predictions
[Claude]: (AI predicts: 0.7)
[Mistral]: (AI predicts: 0.75)
[Cohere]: (AI predicts: 0.9)
[OpenAI]: (AI predicts: 0.75)
Median: 0.75
