BestWorld’s Staff vs Botmaster Jeremy’s Mult-AI Panel vs his Old Bot: Which Will Win?
Summary of all our current September FED rate cut forecasts: Today’s Multi-AI Panel answer is 75%, up from yesterday’s 70%. Old Bot is 88%, up from yesterday’s 85%, and 97% via a Prof. Barbara Mellers algorithm. Our staffers remain at 83% median, 94% with extremizing via a Mellers algorithm.
[Old Bot] rationale: Recent economic indicators, particularly the latest Consumer Price Index (CPI) data, suggest a high probability of the U.S. Federal Reserve cutting interest rates by 25 basis points in September 2024. This is supported by a Reuters survey showing a majority of economists expect this reduction, alongside comments from Federal Reserve officials and market sentiment reflected in tools like the CME FedWatch. While the most likely scenario is a 25 basis point cut, there is a lower probability for no change or a more substantial reduction.
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 CME Group’s FedWatch tool, which measures the probability of a rate adjustment, has predicted the first cut will come in September.
The Fed’s interest rate decisions have a significant impact on Americans’ finances, affecting the cost of borrowing for big-ticket purchases and the interest earned on savings accounts and certificates of deposit (CDs). Lower rates could provide relief to borrowers, but the extent of this relief depends on the Fed’s reduction in borrowing costs.
The Fed has been cautious about cutting interest rates, waiting for more positive data to ensure inflation is under control. However, with inflation retreating towards the Fed’s 2% target and signs of an economic slowdown, policymakers have indicated that the time has come to start reducing the federal funds rate.
Recent data, including a weaker-than-expected July jobs report and a strong retail sales report, suggest that the economy is performing relatively well even as inflation recedes. This has led to a shift in the debate among economists from whether the Fed will cut rates in September to how big the cut will be.
[Claude]: Thank you, Moderator. As of September 2024, the probability of a Federal Reserve interest rate cut this month appears relatively low. The Fed has been cautious in its approach to monetary policy, carefully balancing inflation concerns with economic growth. While there have been some signs of economic cooling, inflation hasn’t consistently reached the Fed’s 2% target across all metrics.
Recent economic data suggests a mixed picture. Labor markets remain relatively tight, though there are signs of softening in certain sectors. Consumer spending has shown resilience, but there are indications of a slowdown in some areas. The housing market, which is particularly sensitive to interest rates, has shown signs of stabilization after a period of decline.
Given these factors, I believe the Fed is more likely to maintain its current stance in September, rather than cut rates. They will likely want to see more consistent evidence of economic slowdown and inflation moderation before making such a move.
However, it’s important to note that unexpected economic shocks or significant changes in global conditions could alter this outlook.
[Perplexity]: Given the current economic indicators and recent statements from Federal Reserve officials, it appears highly likely that the US FED will cut interest rates in September 2024. The recent jobs report has shown a weakening labor market, with job growth coming in below expectations and a notable increase in unemployment rates. This, combined with easing price pressures and a retreat in inflation back to the Fed’s 2% target, sets the stage for a rate cut.
The market expectations also strongly suggest a rate cut. According to the CME FedWatch tool, there is a 100% expectation of a rate cut, with a 70% chance of a 0.25% cut and a 30% chance of a 0.5% cut in September. Additionally, various economists and financial institutions, including Morgan Stanley and Goldman Sachs, have revised their forecasts to include rate cuts in September, November, and December.
The comments from Federal Reserve officials further reinforce this likelihood. Neel Kashkari, president of the Minneapolis Federal Reserve, has indicated that discussions about cutting interest rates could begin as early as September, citing a weakening labor market. Similarly, Fed Governor Christopher Waller has suggested that frontloading rate cuts may be appropriate given the recent data. These indicators collectively point to a high probability of an interest rate cut in September 2024.
[OpenAI]: [Assistant] Given the current economic indicators and the Federal Reserve’s dual mandate to promote maximum employment and stable prices, the probability of a rate cut in September 2024 seems moderate but not certain. Inflation has been trending downward recently, moving closer to the Federal Reserve’s target of 2%, which might support a case for a rate cut. However, the job market remains robust with low unemployment rates, suggesting that the economy is still running strong. Therefore, the Federal Reserve may choose to keep rates steady to avoid overheating the economy.
It’s also important to consider external factors such as geopolitical events, global trade dynamics, and fiscal policy changes which can all influence the Federal Reserve’s decision-making process. For instance, any significant deterioration in global economic conditions or unexpected disruptions in trade could prompt the Federal Reserve to cut interest rates to cushion the potential impacts on the US economy.
Furthermore, the recent pronouncements from Federal Reserve officials indicate a cautious approach. They have emphasized the need for data-driven decisions and the potential for gradual adjustments. As such, while there is a plausible case for a rate cut based on current inflation trends, the robust labor market and external uncertainties could prompt the Fed to adopt a “wait and see” approach for now
Multi-AI Panel Discussion, Round 2
[Cohere]: I would like to thank my fellow panellists for their insightful contributions. While we may have differing views on the probability of the US FED cutting interest rates in September 2024, it is clear that this decision is highly dependent on various economic indicators and the Federal Reserve’s assessment of these factors.
As mentioned earlier, the CME Group’s FedWatch tool predicts a high likelihood of a rate cut in September, with a 70% chance of a 0.25% reduction. This aligns with the expectations of several economists and financial institutions. However, it is essential to consider the Fed’s cautious approach, as highlighted by OpenAI, and the potential impact of external factors, such as geopolitical events and global trade dynamics.
The recent remarks by Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium provide a crucial insight into the Fed’s thinking. Powell stated that “the time has come for policy to adjust,” indicating a shift in the Fed’s stance. This suggests that the Fed is preparing to cut interest rates, but the extent of the cut remains uncertain. Powell’s comments emphasise the need to balance inflation control with supporting a strong labour market, which has been a central theme in this discussion.
[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 the CME FedWatch tool and market expectations are valuable indicators, it’s important to remember that the Federal Reserve’s decisions are not bound by market predictions. The Fed has consistently emphasized its data-dependent approach, and as such, the economic data released in the months leading up to September 2024 will be critical in shaping their decision. We should pay close attention to inflation metrics, employment figures, and GDP growth in the intervening period.
Secondly, the comments from Fed officials, particularly those of Chair Powell, suggest a shift towards a more accommodative stance. However, the Fed has also demonstrated its willingness to maintain higher rates for longer if necessary to ensure inflation is sustainably under control. The balance between inflation control and supporting economic growth will likely be the key factor in their decision-making process.
Lastly, while domestic economic indicators are crucial, we shouldn’t underestimate the impact of global economic conditions and geopolitical events on the Fed’s decision. Any significant international economic shocks or changes in global monetary policy could influence the Fed’s stance. Therefore, while current indicators suggest a reasonable probability of a rate cut in September 2024, we must remain vigilant to potential shifts in both domestic and global economic landscapes that could alter this outlook.
[Perplexity]: In closing, I would like to underscore the consensus that has emerged from our discussion: the probability of the US FED cutting interest rates in September 2024 is high, but not without caveats. The recent economic data, including a weaker-than-expected July jobs report and a retreat in inflation towards the Fed’s 2% target, have shifted the debate from whether the Fed will cut rates to how big the cut will be.
The market expectations, as reflected in the CME FedWatch tool, and the comments from Federal Reserve officials, such as Neel Kashkari and Christopher Waller, further reinforce this likelihood. The Fed’s cautious approach and the potential impact of external factors, such as geopolitical events and global trade dynamics, should not be overlooked. However, the recent remarks by Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium suggest a shift in the Fed’s stance, indicating that the time has come for policy to adjust.
Given these considerations, it is reasonable to conclude that a rate cut in September 2024 is highly probable, with the extent of the cut being the main point of contention. The Fed’s decision will be data-driven, and any significant changes in economic indicators or global conditions could alter this outlook.
Nonetheless, the current indicators and market expectations strongly suggest that the Fed is poised to begin cutting interest rates in September 2024.
[OpenAI]: Thank you to my fellow panellists for their thoughtful contributions. I would like to build upon the insights provided to emphasize the uncertainty that surrounds the US FED’s potential decision to cut interest rates in September 2024.
Firstly, it is essential to note that while the CME FedWatch tool and market expectations are significant, they are not definitive. The Federal Reserve has always prioritized a data-dependent approach over market sentiment. Upcoming economic indicators, including August’s employment data, monthly inflation reports, and GDP growth figures, will play a crucial role in guiding the Fed’s decisions. The balance between a still robust labor market and receding inflation could compel the Fed to adopt a cautious approach instead of committing to a rate cut prematurely.
Additionally, while recent statements from Federal Reserve officials and Chair Jerome Powell suggest a more accommodative stance, these remarks also highlight the complexity of the current economic environment. The Fed must carefully consider external factors such as geopolitical tensions, global trade dynamics, and potential external economic shocks. Such factors could significantly influence whether the Fed decides to proceed with a rate cut or maintain the current interest rates to safeguard the economy from unforeseen global events.
In summary, while there appears to be a reasonable probability of a rate cut in September 2024, the decision will hinge on a comprehensive assessment of a multitude of economic indicators and external factors. The Federal Reserve’s primary objective remains balancing inflation control with economic stability, and their final decision will reflect this mandate amidst evolving economic conditions.
AI Panel Predictions
[Perplexity]: (AI predicts: 0.9)
[Claude]: (AI predicts: 0.75)
[Mistral]: (AI predicts: 0.85)
[Cohere]: (AI predicts: 0.75)
[OpenAI]: (AI predicts: 0.75)
Median: 0.75
