BestWorld’s Staff vs Botmaster Jeremy’s Mult-AI Panel and his Old Bot: Which will win?
Summary of all our current FED rate forecasts:
Today’s Multi-AI Panel answer is 60% likely, up from 45%’ on Aug. 5. Today’s Old Bot answer is 40%, up from 35% Aug. 5. We humans are holding steady at 80%.
[Old Bot] rationale:
The likelihood of a Fed rate cut in September 2024 is contingent on various factors, including current and projected inflation trends, economic growth forecasts, labor market conditions, and global economic uncertainties. While the Fed aims to maintain higher rates until inflation is clearly under control, economic pressures could prompt earlier action. The current economic outlook shows signs of recovery with inflation moderating, but market expectations and Fed projections suggest a moderate probability of a rate cut in September 2024. The decision will depend on ongoing assessment of economic data, including inflation rates and employment, and potential new economic challenges. The overall probability is estimated at around 30%.
[Old Bot] forecast, 40% (Editor’s note, Old Bot appears to be contradicting itself because it is simultaneusly forecasting 30% and 40%.)
BestWorld staffs’ latest forecast details. 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 since July 18, 2024.
5-August-2024 [Carolyn] 0.93 Troubles in the AI boom paradise. Intel https://techcrunch.com/2024/08/01/intel-to-lay-off-15000-employees, Infineon, Germany’s largest chip manufacturer, to cut or relocate 2,800 jobs https://www.tagesschau.de/wirtschaft/unternehmen/infineon-stellenabbau-quartalszahlen-100.html
5-August-2024 [Brian] 0.85 Economic slowdown has triggered stock market correction. It’s not the role of the FOMC to take into account the market but it does have an influence. https://www.nytimes.com/2024/08/05/opinion/david-rosenberg-recession.html
Median 0.8
Mean 0.7871428571
Full forecast record 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?
AI Panel Discussion Round 1
[Claude]: Thank you, Moderator. The probability of the US Federal Reserve cutting interest rates in September 2024 is a complex issue that depends on various economic factors and future developments. As of now, it’s challenging to provide a precise probability, but we can discuss some key considerations.
The Fed’s decision will largely depend on the state of the economy, inflation rates, and employment figures leading up to September 2024. If inflation continues to moderate and approach the Fed’s 2% target, while economic growth remains steady, there could be room for rate cuts.
However, if inflationary pressures persist or the economy shows signs of overheating, the Fed may maintain higher rates or even consider further increases.
It’s also worth noting that September 2024 falls within a presidential election year in the United States. Historically, the Fed has been cautious about making significant policy changes close to elections to avoid the appearance of political influence. This factor could potentially decrease the likelihood of a rate cut in that specific month, even if economic conditions might otherwise warrant one.
[Cohere]: The probability of the US Federal Reserve cutting interest rates in September 2024 is high.
The Federal Reserve has been raising interest rates since early 2022 to combat inflation, which hit a 40-year peak of 9.1% in June 2022. However, inflation has been cooling, and as of June 2024, it was at an annual rate of 3%. This has led to expectations that the Fed will soon start cutting interest rates.
The Federal Open Market Committee (FOMC), led by Federal Reserve Chair Jerome Powell, meets eight times a year to discuss interest rates. They have met four times in 2024 so far, and the remaining meetings this year are scheduled for September, November, and December. At the July 2024 meeting, Powell stated that a rate cut “could be on the table at the September meeting” if inflation continues to move towards the target rate of 2%.
Financial markets and economists largely predict that the first interest rate cut will occur in September, with some also expecting additional cuts in November and December. However, the size of the cut is still uncertain, with predictions ranging from a
One key factor is the inflation rate. If inflation is running above the FED’s target rate of 2%, the likelihood of an interest rate cut diminishes as the FED typically uses higher rates to combat inflation. Conversely, if inflation rates are within or below target, the probability of a rate cut increases, especially if other economic indicators show signs of slowing growth or a potential recession.
Another critical factor to consider is the state of the labor market. If unemployment rates start to rise or job growth slows significantly, the FED might consider lowering rates to stimulate economic activity and boost employment. However, the FED also keeps a close eye on wage growth and participation rates to evaluate the overall health of the labor market.
Lastly, global economic conditions and geopolitical events can influence the FED’s decision-making process. Trade tensions, conflicts, and international economic downturns can affect the US economy and financial markets.
Therefore, if external factors create significant economic uncertainty or financial instability, the FED may opt to cut interest rates to provide a cushion for the US economy.
Overall, predicting the exact probability of a rate cut in September 2024 requires a detailed analysis of multiple evolving economic factors, but current trends and indicators can provide reasonable insights.
Multi-AI Panel Discussion, Round 2
[Claude]: Thank you for the opportunity to provide closing remarks. I’d like to address a few key points raised by the other participants and add some additional context.
Firstly, I agree with Claude’s point about the significance of the 2024 presidential election. However, I would argue that while the Fed strives to remain apolitical, economic realities may necessitate action regardless of the political calendar. If economic indicators strongly suggest the need for a rate cut, the Fed may feel compelled to act in September 2024, even if it’s close to the election.
Secondly, Cohere’s mention of the Fed’s recent statements is crucial. However, it’s important to note that economic conditions can change rapidly, and the Fed’s forward guidance should be interpreted cautiously. While a September 2024 rate cut may be “on the table” now, unforeseen economic developments could alter this outlook significantly over the next year.
Lastly, I concur with OpenAI’s emphasis on global economic conditions. The interconnectedness of global markets means that events far beyond U.S. borders can have a substantial impact on Fed policy. For instance, a major economic slowdown in China or Europe could increase the likelihood of a U.S. rate cut, even if domestic indicators are mixed. Therefore, monitoring global economic trends will be crucial in assessing the probability of a September 2024 rate cut.
[Cohere]: I appreciate the opportunity to provide some closing thoughts on this intriguing topic. The probability of an interest rate cut by the US Federal Reserve in September 2024 is indeed a complex and dynamic issue, as my fellow panelists have highlighted.
I would like to emphasize that while the Fed’s decision will be influenced by various economic indicators, it is also important to consider the Fed’s mandate and broader economic goals. The Fed has a dual mandate of price stability and maximum sustainable employment. Therefore, their interest rate decisions will be guided by how these actions help achieve these goals.
Additionally, I want to reiterate the point about the Fed’s cautious approach during election years. While economic realities may indeed necessitate action, the Fed is likely to be extra vigilant in ensuring that any decision made in the lead-up to the 2024 presidential election is well-communicated and justified by economic data. This could mean that they provide clear and conservative forward guidance, carefully managing market expectations to avoid any perception of political influence.
[OpenAI]: Thank you for the opportunity to add my closing thoughts. The decision by the US Federal Reserve to adjust interest rates in September 2024 will be intricately tied to the evolving economic landscape and multifaceted considerations. While each of my fellow panelists has provided valuable insights, a synthesis of these perspectives can offer a more comprehensive view.
Firstly, I concur with Claude and Cohere that the proximity to a presidential election will indeed influence the Fed’s actions, potentially leading to a more cautious approach. However, it should not be entirely ruled out that economic necessity could drive the Fed to act despite the political context. If inflation drops to sustainable levels and employment figures stabilize, the stage could be set for a rate cut irrespective of the electoral calendar, provided other conditions align.
Secondly, OpenAI’s emphasis on global economic conditions as a pivotal factor is crucial. The US economy does not operate in a vacuum, and external economic shocks or sustained trends from major economies like China or the EU could prompt preemptive measures by the Fed. Any significant international downturn could catalyze a rate cut, aiming to shield the US economy from cascading effects.
In closing, while the probability of the Fed cutting rates in September 2024 remains fraught with uncertainties, it hinges on a complex interplay of domestic economic indicators, global economic trends, and the overarching political climate. A prudent approach would be to continuously monitor these variables and remain adaptable to the fluidity of the economic environment.
AI Panel Predictions
[Claude]: (AI predicts: 0.55)
[Mistral]: (AI predicts: 0.65)
[Cohere]: (AI predicts: 0.9)
[OpenAI]: (AI predicts: 0.4)
Median: 0.6
