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 40% likely, down from 68%’ on Aug. 8. Today’s Old Bot answer is 32.5%, up from 50% Aug. 8. We humans are holding steady at 80%
[Old Bot] Rationale: The likelihood of a Federal Reserve rate cut in September 2024 is influenced by various factors, including current inflation trends, economic growth projections, labor market conditions, and the Fed’s forward guidance. Inflation has moderated but remains above target levels, and while economic growth may slow down, the labor market is still relatively robust. Despite investor expectations and some signs of economic cooling, particularly in inflation and rising unemployment, the Fed is cautious and may avoid a rate cut without clear evidence of sustained economic moderation and inflation control. Overall, significant economic changes, such as a downturn or pronounced decrease in inflation rates, would increase the likelihood of a rate cut, though as it stands, the probability remains uncertain.
BestWorld staff’s latest forecast details:
Their forecasts are unchanged since Sept. 5. There is one new forecast rationale:
9-August-2024 [Carolyn] 0.93 Holding steady. While recession fears are receding, there now is no likelihood of an emergency FED rate cut before the scheduled Sept. meeting. “The Department of Labor reported Thursday that weekly jobless claims unexpectedly fell during the week ending August 3, calming recessionary fears after last Friday’s lackluster unemployment report. https://thedispatch.com/newsletter/morning/google-latest-target-in-antitrust-boom/
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?
[Claude]: Thank you, Moderator. As of August 2024, the probability of a Federal Reserve interest rate cut in September 2024 appears to be moderate to low. The Fed has been cautious in its approach to monetary policy, carefully balancing inflation concerns with economic growth targets.
Recent economic indicators have shown mixed signals. While inflation has somewhat moderated from its peak, it remains above the Fed’s 2% target. The labor market has remained resilient, but there are signs of cooling in certain sectors. GDP growth has been steady but not robust enough to completely rule out the need for stimulus.
Given these factors, I believe the Fed will likely maintain a data-dependent approach. Unless there’s a significant deterioration in economic conditions or a sharp decline in inflation over the next month, the Fed may choose to hold rates steady in September, reserving the option for cuts later in the year if needed. However, this assessment could change rapidly based on incoming economic data and global events.
[Cohere]: As of early August 2024, there is a high probability that the US Federal Reserve will cut interest rates in September 2024.
The Federal Reserve has been battling inflation for over two years, and while it has shown signs of cooling, the Fed has stated that it wants to see more positive data before making any adjustments. The central bank’s preferred inflation measure is currently just half a percentage point above its 2% goal.
A rate cut in September seems likely as the job market weakens and inflation continues to retreat. The unemployment rate has increased to 4.1%-4.3% from a historic low of 3.5% just 12 months ago, and investors are betting that the Fed will start to lower rates at its next meeting.
However, it is important to note that the Federal Reserve’s decision will depend on the state of the economy and the progress of inflation. Any changes will be driven by data, not politics, as affirmed by Federal Reserve Chair Jerome Powell.
[OpenAI]: [Assistant] Thank you. The probability of the US Federal Reserve (FED) cutting interest rates in September 2024 seems relatively uncertain at this time but could be influenced by several key factors. First, inflation rates have been decreasing steadily over the past few months, moving closer to the FED’s target of 2%. If this trend continues, it might prompt the FED to consider a rate cut to support economic growth.
Second, the labor market has shown signs of stabilization. Employment growth remains steady, and wage growth has moderated, indicating that the economy is neither overheating nor underperforming. However, uncertainties like geopolitical tensions or unexpected economic shocks could sway the decision-making process. Investors and market analysts are also closely watching any signals from the FED, especially in light of recent dovish comments by some key FED officials.
Finally, political pressure could also play a role. With the US presidential election approaching in November 2024, there might be additional pressure on the FED to take actions that could stimulate the economy. However, the FED is historically resistant to political interference and makes decisions based on economic data rather than political cycles. Overall, while a rate cut in September 2024 is possible, it’s far from certain, and continued monitoring of economic indicators will be crucial in the coming months.
Multi-AI Panel Discussion, Round 2
[Claude]: Thank you for the opportunity to provide closing remarks. I’d like to emphasize a few key points that I believe are crucial in assessing the probability of a Fed rate cut in September 2024.
Firstly, while inflation has been trending downward, it’s important to note that the Fed’s preferred measure, core PCE, has been stubborn in its descent. The Fed has repeatedly stressed its commitment to bringing inflation sustainably down to its 2% target. Unless we see a significant acceleration in disinflation over the next year, the Fed may be hesitant to cut rates, even if inflation is close to target. They may want to ensure the trend is durable before easing policy.
Secondly, the strength of the labor market cannot be overstated. While there have been some signs of cooling, as mentioned by my colleagues, the overall job market remains robust. The Fed will be closely watching for any signs of significant weakening before considering rate cuts. A moderate increase in unemployment may not be sufficient to trigger a rate cut if other economic indicators remain strong.
Lastly, I want to address the notion of political pressure. While it’s true that the proximity to the presidential election might create some pressure, the Fed has a strong track record of maintaining its independence. Fed Chair Powell has repeatedly emphasized the importance of data-dependent decision-making. Unless economic conditions clearly warrant a rate cut, it’s unlikely that political considerations would significantly influence the Fed’s decision in September 2024.
[Cohere]: I appreciate the opportunity to provide some closing thoughts on this topic. The probability of a rate cut in September is indeed a challenging question, and it’s clear that there are various factors at play.
Firstly, I’d like to emphasize the importance of the Fed’s dual mandate: price stability and maximum sustainable employment. While inflation is a key concern, the labor market’s health cannot be overlooked. As mentioned, the job market has shown resilience, and a tight labor market could influence the Fed’s decision to hold off on rate cuts, especially if wage growth begins to accelerate again.
Additionally, while the Fed’s preferred inflation measure is close to its target, it’s worth noting that inflation expectations play a crucial role in their decision-making. If the Fed feels that inflation expectations are well-anchored and that the current inflation level is transitory, they may be more inclined to cut rates to support economic growth. However, any hints of inflation becoming entrenched could lead them to maintain or even increase rates to combat it.
[OpenAI]: Thank you for the final opportunity to weigh in on this important discussion. The likelihood of a Federal Reserve interest rate cut in September 2024 remains complex due to varying economic indicators and the broader macroeconomic environment.
One additional factor to consider is the global economic landscape. Decisions by other central banks, such as the European Central Bank or the Bank of Japan, could influence the Fed’s actions. For example, if other major economies continue to tighten their monetary policy to control inflation, the Fed might delay an interest rate cut to avoid unfavorable currency fluctuations and capital outflows that could destabilize the U.S. economy.
Moreover, market sentiment and liquidity conditions could be significant determinants. If financial markets show signs of stress or if credit conditions tighten significantly, the Fed might cut rates preemptively to maintain financial stability. Unexpected developments, such as a sharp downturn in global trade or geopolitical tensions, could also prompt more urgent action from the Fed.
In summary, while the data-driven and cautious approach of the Fed has been reiterated by my colleagues, it is crucial to remain vigilant of not just domestic economic conditions but also international influences and market dynamics. These multifaceted considerations underscore that the probability of a rate cut in September 2024 remains uncertain, hinging on upcoming
economic data and evolving global events.
AI Panel Predictions
[Claude]: (AI predicts: 0.35)
[Mistral]: (AI predicts: 0.45)
[Cohere]: (AI predicts: 0.8)
[OpenAI]: (AI predicts: 0.35)
Median: 0.4
