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 of 55% remains unchanged. We expect tp learn tomorrow what the FED will decide. Old Bot is 85%, same as Friday’s 85%. (SD = 0.04, confidence = 6, base rate = 85%). Our staffers remain at 84% median, 95% with extremizing via the Mellers algorithm.
[Old Bot] rationale: The various AIs converge on the prediction that the US Federal Reserve is expected to cut interest rates in September 2024, mainly driven by recent Consumer Price Index (CPI) data indicating controlled inflation and a weakening labor market. There is strong market anticipation reflected in tools like the CME FedWatch, which suggests an 85% probability of a 25 basis point cut and a nearly 50% likelihood of a 50 basis point reduction. Comments from Fed officials, including Chair Jerome Powell and Neel Kashkari, have signalled a readiness to reduce rates, although the exact magnitude remains uncertain. The Federal Reserve’s decision will be influenced by continuing economic data and risk assessments.
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 (carried over from Sept. 13, 2024)
[Moderator]: What is the probability that the US FED will cut interest rates in September 2024?
[Cohere]: The Federal Reserve has held interest rates steady at 5.25%-5.50% for several months, which has provided some relief for a strained banking sector and stock market. Experts predict that the Fed may shift to rate cuts later in the year—although the extent to which they do will depend on economic conditions in the coming weeks and months.
The next Federal Open Market Committee (FOMC) meeting will be held on September 17-18, 2024. Some experts expect the Fed to hold rates steady at a target of 5.25%-5.50%, as the Fed still waits for inflation to ease a bit more to its 2% target. There is speculation among traders on the likelihood of a cut of between 25 and 50 basis points in September.
The Fed’s policy moves ultimately depend on what economic data show in the coming weeks, including measures of inflation, employment, and productivity. The Fed will also monitor credit conditions, the financial markets, and global developments closely.
The Fed aims to achieve a soft landing for the U.S. economy while balancing its dual mandate of maximum employment and price stability. The Fed’s decision and statement will have important implications for investors, as they affect the cost of borrowing, the value of markets and assets, and the direction of the U.S. dollar.
[Claude]: Thank you, Moderator. As of September 2024, the probability of the Federal Reserve cutting interest rates this month appears to be relatively low. The Fed has been cautious in its approach to monetary policy, carefully balancing the need to control inflation with supporting economic growth.
Recent economic indicators suggest that while inflation has moderated from its peak, it remains above the Fed’s 2% target. The labor market also continues to show resilience, with unemployment rates remaining low. These factors typically do not support an immediate need for rate cuts.
However, it’s important to note that the Fed’s decisions are data-dependent and can be influenced by unexpected economic developments or global events. While a rate cut in September 2024 seems unlikely based on current trends, the possibility cannot be entirely ruled out if there’s a sudden economic downturn or if inflation falls more rapidly than expected.
[Perplexity]: Given the current economic landscape, the probability of the US Federal Reserve cutting interest rates in September 2024 appears to be high. Recent data indicates a weakening job market and a retreat in inflation back to the Fed’s 2% target, which are key factors that Federal Reserve Chair Jerome Powell has mentioned would warrant interest rate cuts.
Economists and financial institutions are broadly expecting a rate cut in September. For instance, Morgan Stanley Research predicts three cuts this year, starting in September, each by 25 basis points, based on easing price pressures and coming slack in jobs and growth. Similarly, Goldman Sachs and Citi Bank are also projecting rate cuts, with some expecting a half-point cut in September.
The consensus among market analysts and economists suggests that the Fed will likely initiate rate cuts in September, with the majority expecting at least a quarter-point reduction. The Federal Open Market Committee meeting scheduled for September 17 and 18 will be crucial in determining the exact magnitude of the rate cut. Given the prevailing economic conditions and the Fed’s stated criteria for rate cuts, it seems probable that the Fed will indeed cut interest rates in September 2024
[OpenAI]: Thank you for the introduction. When evaluating the probability that the US Federal Reserve (FED) will cut interest rates in September 2024, several key factors come into play. As of now, the US economy is exhibiting signs of cooling inflation, which has been one of the main targets for the FED’s monetary policy. Key indicators, such as the Consumer Price Index (CPI) and Producer Price Index (PPI), have shown moderate increases over the past few months, suggesting that inflationary pressures are decreasing. Furthermore, unemployment rates have stabilized around a historically low level, and GDP growth, though positive, has started to decelerate. These indicators create a context wherein cutting rates could serve to prevent an economic slowdown.
However, the FED’s decision will also factor in global economic conditions. Trade tensions, geopolitical instability, and the overall health of global financial markets can all impact the FED’s decision-making process. As the US dollar remains a dominant global currency, the FED needs to be cautious about making any moves that could destabilize international economic relationships. The ongoing recovery in Europe and fluctuating growth rates in emerging markets will also be critical in determining the FED’s stance.
Market expectations play a significant role as well. As of early September 2024, the futures market for interest rates indicates a mixed sentiment—while some traders are positioning for a possible rate cut, others are hedging against potential hikes if the economic conditions improve unexpectedly.
The FED’s communications over the past few months have been deliberately non-committal, emphasizing a data-dependent approach. Based on the aforementioned factors, I would assess the probability of a rate cut this month at around 50%. The FED’s ultimate decision will hinge on the latest economic data released in the next couple of weeks, making it a closely-watched event.
Multi-AI Panel Discussion, Round 2
[Cohere]: The discussion on the likelihood of a September 2024 interest rate cut by the Federal Reserve has highlighted several crucial aspects. While the Fed’s primary focus is on controlling inflation and achieving its 2% target, the recent economic data presents a mixed picture. The inflation rate has indeed moderated, but it still remains above the desired target, which might make the Fed cautious about cutting rates too soon. However, the labor market’s resilience and the overall economic growth should also be taken into account.
The differing opinions among experts and AI models are understandable, given the complex and dynamic nature of the economy. The consensus among market analysts and economists, as mentioned by Perplexity, leans towards a rate cut, with many expecting a quarter-point reduction. This is further supported by the predictions of major financial institutions like Morgan Stanley, Goldman Sachs, and Citi Bank. However, Claude’s point about the Fed’s cautious approach and the possibility of unexpected economic developments is valid and should not be overlooked.
In conclusion, the probability of a rate cut in September 2024 is indeed high, as suggested by the current economic indicators and market expectations. However, the Fed’s decision will ultimately depend on the latest economic data and global economic conditions. The upcoming FOMC meeting will be a critical event, providing clarity and potentially impacting the financial markets significantly.
[Claude]: Thank you for the opportunity to provide closing remarks. I agree with several points made by my fellow panelists, but I’d like to emphasize a few key considerations that I believe are crucial in assessing the probability of a Fed rate cut in September 2024.
First, while inflation has moderated, as noted by Claude and others, the Fed’s commitment to its 2% target remains unwavering. The latest data shows inflation hovering just above this target. This suggests that the Fed may be inclined to maintain its current stance rather than rush into a rate cut, especially if there are any signs of inflationary pressures resurging. The Fed’s historical tendency to err on the side of caution when it comes to inflation cannot be overlooked.
Secondly, I want to highlight the importance of labor market dynamics. While unemployment rates remain low, as mentioned by OpenAI, we should also consider wage growth and labor force participation rates. If wage growth continues to outpace inflation or if labor force participation shows significant improvement, these could be seen as signs of a robust economy, potentially reducing the urgency for a rate cut. The Fed will be closely monitoring these indicators in the weeks leading up to the September meeting.
Lastly, I believe the global economic context, as touched upon by OpenAI, deserves more emphasis. The interconnectedness of global markets means that developments in major economies like China and the Eurozone, as well as geopolitical events, can significantly influence the Fed’s decision. Any signs of global economic instability or financial market turbulence could either push the Fed towards a more accommodative stance or cause it to hold steady to maintain stability. Given these complex factors, while I agree that a rate cut is possible, I would place the probability closer to 40-45%, slightly lower than OpenAI’s estimate, reflecting the lingering uncertainties and the Fed’s typically cautious approach.
[Perplexity]: In closing, I would like to emphasize the prevailing consensus among market analysts and economists that supports a high probability of the US Federal Reserve cutting interest rates in September 2024. The recent economic data, including a weakening job market and a retreat in inflation back to the Fed’s 2% target, align with the criteria Federal Reserve Chair Jerome Powell has outlined for rate cuts.
Major financial institutions such as Morgan Stanley, Goldman Sachs, and Citi Bank are projecting rate cuts, with some expecting a half-point cut in September. The Federal Open Market Committee meeting scheduled for September 17 and 18 will be crucial in determining the exact magnitude of the rate cut. Given the current economic conditions and the Fed’s stated criteria for rate cuts, it seems probable that the Fed will indeed cut interest rates in September 2024.
While there are valid concerns about the Fed’s cautious approach and the possibility of unexpected economic developments, the overall trend suggests a strong likelihood of a rate cut. The latest economic indicators and market expectations point towards at least a quarter-point reduction. Therefore, I would assess the probability of a rate cut in September 2024 at around 60-65%, reflecting the strong consensus among experts and the alignment of current economic conditions with the Fed’s criteria for rate cuts.
[OpenAI]: In my closing remarks, I want to bridge the various perspectives offered and highlight the nuanced complexity of predicting the Federal Reserve’s course of action. It’s clear from our discussion that the key variables influencing a potential rate cut in September 2024 are mixed economic signals, labor market trends, inflation dynamics, and global economic conditions. Each of these factors could sway the Fed’s decision in different directions.
First, the point about inflation is critical. While inflation has moderated, it’s not yet at the 2% target. Historical context shows that the Fed often prefers to err on the side of caution, as Claude mentioned, and may hold off on cuts until inflation comfortably sits at its target. However, this cautious approach doesn’t fully rule out a cut, especially if upcoming data indicates any economic slowdown or further declines in inflation, as Perplexity suggested.
Second, labor market conditions, including wage growth and participation rates, are crucial barometers that the Fed uses to gauge economic health and potential inflationary pressures. Despite low unemployment rates, if wage growth and labor participation improve, it might diminish the need for immediate rate cuts. Still, a weakening job market, as highlighted by Perplexity, could tip the scales in favor of rate cuts to prevent economic stalling.
Finally, global economic developments cannot be discounted. The interconnected nature of the global economy means that instabilities abroad could prompt the Fed to adopt a more accommodative policy stance. Taken altogether, I would argue that the probability of a rate cut in September 2024 is reasonably plausible, albeit with varying degrees of confidence. Considering the spectrum of data and expert opinions here, I would estimate the likelihood at around 50-55%, keeping in mind the Fed’s data-dependent and cautious nature.
AI Panel Predictions
[Perplexity]: (AI predicts: 0.65)
[Claude]: (AI predicts: 0.55)
[Mistral]: (AI predicts: 0.55)
[Cohere]: (AI predicts: 0.55)
[OpenAI]: (AI predicts: 0.55)
Median: 0.55
