BestWorld’s Staff vs Botmaster Jeremy’s Mult-AI Panel and his Old Bot : Which will win?
BestWorld’s staff of Michael, Brian, and Carolyn are competing with Botmaster Jeremy’s Mult-AI Panel on our forecasting question of “What is the probability that the US Federal Reserve Board (US FED) will cut interest rates in September 2024?”
Today’s BestWorld staff’s answer: 71% likely. Today’s Multi-AI Panel answer: 73% likely. Today’s Old Bot answer: 35%
How we humans decided this:
27-July-2024 [Brian] 0.75 Inflation is looking better behaved, the unemployment rate is on the rise, and there is growing evidence that consumer spending is cooling.
28-July-2024 Brian 0.78 Drop in Michigan Consumer Sentiment index. Sources: https://seekingalpha.com/article/4707389-michigan-consumer-sentiment-drops-to-8-month-low https://economics.td.com/us-disconnect-between-consumer-economic-data/
28-July-2024 [Carolyn] 0.8 Job growth is moderating, suggesting increased likelihood on the Fed dropping the rate soon. https://www.bloomberg.com/ news/articles/2024-07-27/fed-rate-cuts-fomc-is-about-to-nod-at-a-move-as-job-growth-moderates
29-July-2024 [Carolyn] 0.81 At each of their four meetings this year, interest-rate cuts have been a question for later. This time, though, inflation and labor-market developments should allow officials to signal a cut is very possible at their next meeting, in September. https://www.wsj.com/economy/central-banking/fed-near-interest-rate-cut-d303dbd5
Median 0.75Our prosective Brier Scores given our forecasts since 19 July 2024:
If the FED raises rates in September and it resolves Yes, 0.17
If it resolves No 1.01
Our forecasts of 30 July 2024 —>
Our forecasts of 29 July 2024 —>
Our forecasts of 26 July 2024 —>
Our forecasts of 25 July 2024 —>
Our forecasts of 24 July 2024 —>
Our forecasts of 23 July 2024 —>
Comparison to the Multi_AI Panel:
[Claude]: (AI predicts: 0.7)
[Mistral]: (AI predicts: 0.7)
[Cohere]: (AI predicts: 0.9)
[OpenAI]: (AI predicts: 0.75)
Median: 0.73
Comparison with Jeremy’s Old AI Bot (same code as bestworldbot) forecasting this FED question:
Old AI Bot = 0.35
Its rationale: The prediction of a possible US Federal Reserve interest rate cut by September 2024 hinges on various factors including current economic indicators, inflation trends, historical behavior of the Fed, and labor market conditions. While inflation is expected to ease, it is still anticipated to remain above the Fed’s 2% target. Historically, the Fed has been cautious about cutting rates unless there is compelling evidence of economic distress. Despite the strong job market and current economic outlook, there are uncertainties such as potential geopolitical and economic changes that might influence the Fed’s decision. Therefore, while there is a possibility of a rate cut, the probability remains uncertain and relatively low.
See more about our AI vs human forecasting research here —>
Our future research concepts here —>
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. Predicting Fed interest rate decisions is a complex task, as it depends on various economic indicators and geopolitical factors. However, based on current trends and historical patterns, I believe there is a moderate probability, around 40-50%, that the US Federal Reserve will cut interest rates in September 2024.
The primary factors supporting this view are the potential for economic slowdown and the Fed’s typical policy cycle. If inflation continues to trend downward and reaches the Fed’s 2% target by mid-2024, there may be room for rate cuts. Additionally, if we see signs of weakening labor markets or reduced consumer spending, the Fed might be inclined to ease monetary policy to stimulate economic growth.
However, it’s important to note that this prediction comes with significant uncertainty. The Fed’s decisions are data-dependent, and unforeseen events such as geopolitical tensions, supply chain disruptions, or energy price shocks could alter the economic landscape and influence the Fed’s policy stance. We should closely monitor incoming economic data and Fed communications in the coming months for more accurate projections.
[Cohere]: The probability of the US Federal Reserve cutting interest rates in September 2024 is high, according to various sources and experts.
A Reuters poll of 100 economists in July 2024 revealed that 82 out of 100 predicted the first 25-basis-point cut would occur in September, pushing the federal funds rate to the 5.00%-5.25% range. This is an increase from the 70 out of 108 economists who made the same prediction in a May 2024 poll. Financial data company FactSet also reported that about 9 out of 10 economists anticipate a rate reduction in September.
The Federal Reserve’s decision will depend on economic indicators such as inflation, employment, and borrowing rates. While there are signs that the labor market is cooling, with job growth averaging 177,000 a month in the past three months, inflation is also continuing to cool. The consumer price index fell to 3% in June 2024, the lowest in over three years.
Given these factors, the Federal Reserve is likely to cut interest rates in September 2024, with a high level of confidence among economists and market analysts.
[OpenAI]: Thank you, Moderator. I’ll start by examining the key factors that influence the Federal Reserve’s decision-making process regarding interest rates.
The Fed’s primary objectives are to maintain stable prices and maximize employment. Therefore, key economic indicators such as inflation rates, unemployment levels, and GDP growth will play a significant role in determining whether the Fed decides to cut interest rates in September 2024. If inflation is below the target range of 2%, and there’s evidence of slowing economic growth or rising unemployment, the probability of a rate cut increases.
Recent trends and forecasts in the global and U.S. economy are also critical. For example, if significant international economic disruptions or a downturn were to occur, the Fed might consider a rate cut to mitigate domestic impacts.
Additionally, geopolitical events, changes in trade policies, and the performance of major economies like China and the European Union could affect the Fed’s decision. Any combination of these factors leading to economic headwinds could prompt a rate cut to stimulate the economy.
Lastly, we must consider the Fed’s recent policy actions and their communication strategies, including forward guidance. If the Fed has already hinted at a more dovish stance, or if recent decisions reflect a move toward easing monetary policy, this could signal a higher likelihood of a rate cut in 2024.
Therefore, while it is difficult to assign a precise probability, closely monitoring these economic indicators and the Fed’s guidance will provide more clarity as we approach September 2024.
Multi-AI Panel Discussion Round 2
AI Panel Discussion Round 2
[Claude]: Thank you for the opportunity to provide closing remarks. After considering the insights shared by my fellow panelists, I’d like to add a few points to our discussion on the probability of a Fed rate cut in September 2024.
First, I want to emphasize the importance of the Federal Reserve’s dual mandate: maintaining price stability and maximizing employment. As we approach September 2024, if inflation continues to trend downward as Claude and Cohere have suggested, and if it remains consistently below the Fed’s 2% target, this could significantly increase the likelihood of a rate cut. However, we must also consider the employment situation. If the labor market remains robust, with low unemployment and steady wage growth, the Fed may be hesitant to cut rates, even in the face of low inflation.
Secondly, I’d like to highlight the global economic context. As OpenAI mentioned, international economic conditions and geopolitical events can have a substantial impact on the Fed’s decision-making process. If we see a significant slowdown in major economies like China or the European Union, or if there are major disruptions to global trade, the Fed may be more inclined to cut rates to insulate the U.S. economy from potential spillover effects.
Lastly, while the consensus among economists seems to be leaning towards a rate cut in September 2024, as Cohere pointed out, we should remain cautious about placing too much confidence in these predictions.
The economic landscape can change rapidly, and the Fed has shown in recent years that it’s willing to adjust its policy stance quickly in response to changing conditions. Therefore, while a rate cut in September 2024 seems plausible based on current information, we should continue to monitor economic indicators and Fed communications closely in the months leading up to that date.
[Cohere]: (no response)
[OpenAI]: Thank you, Moderator. Building on what has already been discussed, I want to underscore the importance of continuously monitoring real-time economic data and Fed commentary as we approach September 2024. While current indicators point toward a high probability of a rate cut, as highlighted by the consensus among economists in recent polls, it is crucial to remain vigilant.
One key point to consider is the Fed’s reaction function. The Federal Reserve has increasingly emphasized its reliance on data-dependent decisions, meaning that any unexpected fluctuations in inflation, employment, or other critical economic metrics could swiftly alter their trajectory. For example, if new data reveals persistent inflationary pressures or a re-acceleration in the economy, the Fed might delay or even forgo a rate cut to avoid overheating the economy.
Moreover, we should not underestimate external shocks—from geopolitical strife to sudden changes in global markets—that could prompt the Fed to change course. While the scenario currently points towards a rate cut, the complexity and interconnectedness of the modern global economy mean we should be cautious and ready to adjust our expectations based on new developments. Thus, while a rate cut in September 2024 seems probable, sustained analysis of forthcoming economic data will be essential in refining this prediction.
AI Panel Predictions
[Claude]: (AI predicts: 0.7)
[Mistral]: (AI predicts: 0.7)
[Cohere]: (AI predicts: 0.9)
[OpenAI]: (AI predicts: 0.75)
Median: 0.73
