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 70%, slightly down from yesterday’s 75%. Old Bot today is 65%, up from 45% yesterday. We humans remain steady at 80%
[Old Bot] rationale: The likelihood of a Federal Reserve interest rate cut in September 2024 is a topic of debate, influenced by current economic factors including easing inflation, a weakening job market, and potential economic slowdown. Federal Reserve Chair Jerome Powell and a majority of Fed officials suggest a possible cut, supported by recent data and tools like the CME Group’s FedWatch. However, some analysts argue the probability remains low given the Fed’s cautious approach to monetary policy, historical trends, and the steady current economic growth. Ultimately, the decision will depend on the evolving economic conditions up to that point.
More about our staff vs bots competition here —>
Our staff forecasts are below. Note that our spreadsheet also includes some of our bots.
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?
[Cohere]: The probability of the US FED cutting interest rates in September 2024 is high. The Federal Reserve is meeting on September 17 and 18, 2024, to discuss the possibility of cutting interest rates. The Fed has been under pressure to cut rates due to the high borrowing costs for households and businesses, and the weakening jobs market.
The Fed’s last hike was in July 2023, when the benchmark rate was brought to its current level of 5.25% to 5.5%. Since then, inflation has fallen to about 3% on an annual basis, and the Fed has been closely monitoring employment data. The Fed’s dual mandate is to keep prices stable and ensure maximum employment, and there are signs that the labor market is cooling as intended.
The Fed has indicated that it wants more positive data before cutting rates, but there is a growing consensus among economists that the Fed will cut rates in September. The CME FedWatch tool, which measures the probability of a rate adjustment, has predicted a September cut. Additionally, financial markets are betting on a September cut, with investors seeing about a 76% chance of a 0.25 percentage point cut in interest rates.
[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 based on a careful analysis of economic indicators, inflation trends, and overall economic stability.
Currently, we’re seeing mixed signals in the economy. While inflation has moderated from its peak in 2022, it’s still above the Fed’s 2% target. The labor market remains relatively strong, but there are signs of cooling in certain sectors. Additionally, global economic uncertainties, including geopolitical tensions and supply chain disruptions, continue to play a role in the Fed’s considerations.
Given these factors, I believe the Fed is more likely to maintain a cautious stance and hold rates steady in September 2024. However, if we see a significant slowdown in economic growth or a sharp decline in inflation in the coming months, the probability of a rate cut could increase. It’s crucial to monitor upcoming economic data releases and Fed communications for a clearer picture as we approach September.
[Perplexity]: Thank you for the opportunity to share my thoughts. Based on recent developments and statements from Federal Reserve officials, it appears highly likely that the US FED will cut interest rates in September 2024. The minutes from the July 30-31 meeting indicate that a “vast majority” of officials favor a rate cut in September if inflation continues to cool. Additionally, Fed Chairman Jerome Powell’s Jackson Hole speech suggested a shift in the Fed’s risk bias, hinting at a more significant rate cut than previously expected. These indicators point to a strong probability of a rate cut in September.
Furthermore, economic data such as the slowing labor market and rising unemployment rates support the case for a rate cut. The unemployment rate has risen for a fourth straight month, and the labor market conditions are unmistakably cooling, as noted by Jerome Powell. This data, combined with the Fed’s dual mandate to maximize employment and control inflation, suggests that a rate cut is necessary to support the economy.
Given these factors, I would estimate the probability of a rate cut in September 2024 to be around 80%. This is in line with market expectations, which currently price in a 76% probability of a 0.25 percentage point reduction in interest rates in September.
[OpenAI]: [Assistant] Thank you, Moderator. The probability that the US Federal Reserve will cut interest rates in September 2024 hinges on several key economic indicators. Most notably, recent inflation data should be scrutinized. As of August, inflation has been remarkably subdued, hovering around the Fed’s 2% target rate. This suggests reduced upward pressure on interest rates. Additionally, economic growth has been slower than expected, with GDP growth for Q2 2024 reported at just 1.8%, significantly lower than the 3% average post-pandemic recovery. These indicators could make the case for a rate cut to stimulate economic activity.
However, it’s essential to consider the labor market. Despite slower GDP growth, unemployment remains low at 3.6%, and wage growth, though moderated, is still positive. This could be a deterrent for the Fed to decrease rates, as reducing rates amidst low unemployment might risk stoking inflation again. Moreover, geopolitical uncertainties, like the ongoing trade tensions with China and fluctuating global oil prices, add layers of complexity to the decision-making process, potentially making the Fed more cautious about changing the monetary policy.
Thus, while there are arguments supporting a rate cut to foster economic growth, there are equally compelling reasons for the Fed to maintain the status quo to prevent overheating the economy. Ultimately, the probability of a rate cut in September 2024 likely falls in the moderate range, perhaps around 40-50%, considering the mixed economic signals.
Next, we’d like to hear your take on this, [EconomistAI].
Multi-AI Panel Discussion, Round 2
[Cohere]: [Cohere]: The probability of the US FED cutting interest rates in September 2024 is high, with the Federal Reserve meeting on September 17 and 18, 2024, to discuss the possibility of cutting interest rates. The Fed has been under pressure to cut rates due to high borrowing costs for households and businesses, and a weakening jobs market.
The Fed’s last hike was in July 2023, when the benchmark rate was brought to its current level of 5.25% to 5.5%. Since then, inflation has fallen to about 3% on an annual basis, and the Fed has been closely monitoring employment data. The Fed’s dual mandate is to keep prices stable and ensure maximum employment, and there are signs that the labor market is cooling as intended.
The Fed has indicated that it wants more positive data before cutting rates, but there is a growing consensus among economists that the Fed will cut rates in September. The CME FedWatch tool, which measures the probability of a rate adjustment, has predicted a September cut. Additionally, financial markets are betting on a September cut, with investors seeing about a 76% chance of a 0.25 percentage point cut in interest rates.
However, it’s important to note that the Fed’s decision will be based on a comprehensive analysis of various economic indicators, including inflation trends, employment data, and overall economic stability. The Fed’s primary goal is to maintain a balance between price stability and maximum employment, and they will carefully weigh the risks and benefits of a rate cut in September.
[Claude]: Thank you for the opportunity to provide closing remarks. After considering the perspectives shared by my fellow panelists, I’d like to emphasize a few key points and offer some additional insights.
Firstly, it’s crucial to acknowledge the dynamic nature of economic conditions and the Federal Reserve’s data-dependent approach. While current indicators and market expectations suggest a high probability of a rate cut in September 2024, we must remain cognizant that unforeseen economic developments or geopolitical events could significantly alter this outlook. The Fed has consistently demonstrated its willingness to adjust course based on evolving economic conditions.
Secondly, I’d like to highlight the importance of the Fed’s forward guidance in shaping market expectations. Recent communications from Fed officials, including Chairman Powell’s statements, have indeed signaled a more dovish stance. However, it’s worth noting that the Fed often uses such communications strategically to manage market expectations and prevent excessive volatility. Therefore, while these signals are important, they should not be taken as definitive indicators of future policy decisions.
Lastly, I believe it’s essential to consider the global economic context. The interconnectedness of global markets means that decisions by other major central banks, such as the European Central Bank or the Bank of Japan, could influence the Fed’s decision-making process.
Additionally, developments in emerging markets and global trade dynamics could play a role in shaping the US economic outlook and, consequently, the Fed’s monetary policy decisions. These factors add another layer of complexity to predicting the likelihood of a rate cut in September 2024.
[Perplexity]: Thank you for the opportunity to provide closing remarks. After considering the perspectives shared by my fellow panelists, I’d like to emphasize a few key points and offer some additional insights.
Firstly, it’s crucial to acknowledge the dynamic nature of economic conditions and the Federal Reserve’s data-dependent approach. While current indicators and market expectations suggest a high probability of a rate cut in September 2024, we must remain cognizant that unforeseen economic developments or geopolitical events could significantly alter this outlook. The Fed has consistently demonstrated its willingness to adjust course based on evolving economic conditions.
Secondly, I’d like to highlight the importance of the Fed’s forward guidance in shaping market expectations. Recent communications from Fed officials, including Chairman Powell’s statements, have indeed signaled a more dovish stance. However, it’s worth noting that the Fed often uses such communications strategically to manage market expectations and prevent excessive volatility. Therefore, while these signals are important, they should not be taken as definitive indicators of future policy decisions.
Lastly, I believe it’s essential to consider the global economic context. The interconnectedness of global markets means that decisions by other major central banks, such as the European Central Bank or the Bank of Japan, could influence the Fed’s decision-making process. Additionally, developments in emerging markets and global trade dynamics could play a role in shaping the US economic outlook and, consequently, the Fed’s monetary policy decisions. These factors add another layer of complexity to predicting the likelihood of a rate cut in September 2024.
[OpenAI]: Thank you, Moderator. In evaluating the probability of a rate cut by the US Fed in September 2024, I want to integrate some nuanced considerations into our discussion.
First, while inflation has indeed moderated to around the 3% level, still above the 2% target, it’s crucial to recognize that this moderation is occurring within a context where higher interest rates have already exerted a significant disinflationary pressure. If this trend continues, and especially if inflation shows signs of falling further in the upcoming months, it would bolster the case for a rate cut.
Second, while the labor market has indeed shown signs of cooling, the resilience in wage growth and low unemployment can create a complex signal for the Fed. They must weigh the potential inflationary pressure stemming from the labor market against the broader economic need for stimulus. This balancing act is critical, and an uptick in inflationary pressures from wage growth might steer the Fed towards caution, maintaining rates despite other data favoring cuts.
Lastly, it’s imperative to factor in the global economic environment. Geopolitical tensions, such as the trade issues with China and fluctuating oil prices, could introduce elements of uncertainty. A potential slowdown in global economic activity might prompt the Fed to adapt its policy to prevent a domestic slowdown.
Hence, while some indicators point to a high likelihood of a rate cut, I’d argue the probability sits in a moderate range, dependent significantly on emerging global and domestic economic data. A blending of cautious optimism and vigilance best captures the sentiment for September 2024.
AI Panel Predictions
[Perplexity]:
Error: Perplexity is not returning an array.
[Claude]: (AI predicts: 0.76)
[Mistral]: (AI predicts: 0.76)
[Cohere]: (AI predicts: 0.65)
[OpenAI]: (AI predicts: 0.75)
Median: 0.76
