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 70%, slightly down from yesterday’s 65%. Old Bot today is 20%, down from 30% yesterday. We humans are up by 1% to 81%.
[Old Bot] rationale: The likelihood of the Federal Reserve cutting interest rates in September 2024 is mixed, with economic indicators and expert opinions offering differing views. Some believe a rate cut is highly probable due to a weakened job market, rising unemployment, and inflation retreating to the Fed’s 2% target. Fed Chairman Jerome Powell and several officials have indicated that a rate cut could be appropriate if current trends continue. However, others argue that stable economic growth, persistent inflation, and low unemployment reduce the necessity for rate cuts. The upcoming US presidential election and the need for the Fed to evaluate the impact of previous rate hikes also suggest that a rate cut is less likely unless there is an economic downturn or financial crisis.
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 Federal Reserve is meeting on 17 and 18 September 2024 to discuss the possibility of cutting interest rates. The Fed has held the federal fund’s target rate steady at 5.25% to 5.5% since July 2023, and it is unlikely that the Fed will announce a rate cut this week. However, the Fed is expected to offer a hint on when the bank will start cutting, with about 9 in 10 economists pegging the September meeting for the Fed’s first rate reduction since 2020.
The Fed has a twofold policy goal, also called the dual mandate — to keep prices stable and to ensure maximum employment. Inflation continues to cool, reflecting that the prices of goods and services are rising at a progressively slower rate since their 2022 peak. At the same time, the Fed is closely watching employment data. Because rate hikes are designed to slow the economy and tame inflation, they can also cast a pall over hiring.
The Fed will need to feel confident that there won’t be any inflation surprises before it makes its first move, likely making June or July too early to begin the trim cycle. The Fed will be monitoring numerous data points, ranging from inflation to the monthly jobs report.
The CME Group’s FedWatch tool, which measures the probability of a rate adjustment, has predicted the first cut will come in September. The markets are still betting on more than a single rate cut in 2024, even though Fed officials earlier this year projected just one rate cut later in the year. But with inflation easing faster than projected in June,
[Claude]: Thank you, Moderator. As of September 2024, the probability of the Federal Reserve cutting interest rates this month is relatively low, but not zero. The Fed has been cautious in its approach to monetary policy, carefully balancing inflation concerns with economic growth.
Recent economic indicators suggest a mixed picture. While inflation has shown signs of moderating, it remains above the Fed’s 2% target. Employment figures have been steady, but there are concerns about slowing economic growth. The global economic landscape, including ongoing geopolitical tensions and supply chain issues, also plays a role in the Fed’s decision-making process.
Given these factors, I believe there’s approximately a 20-30% chance of a rate cut in September 2024. The Fed is more likely to maintain current rates or make small adjustments rather than implement a significant cut. However, this assessment could change rapidly based on new economic data or unforeseen global events.
[Perplexity]: Thank you for the opportunity to share my thoughts. Based on recent economic data and statements from Federal Reserve officials, it appears that a rate cut in September 2024 is highly likely. The unemployment rate has increased to 4.3% from a historic low of 3.5% just 12 months ago, fueling fears about a potential recession. Additionally, inflation has retreated back to the Fed’s 2% target, which is another condition that Federal Reserve Chair Jerome Powell has mentioned could warrant interest rate cuts.
Furthermore, the minutes from the Fed’s July meeting indicate that a “vast majority” of officials believe a rate cut in September is appropriate, with some policymakers even suggesting a half-percentage-point reduction. Market analysts are also optimistic about a rate cut, with investors betting on a near 2-in-3 chance of a larger half-point cut. Rabobank currently projects four rate cuts from the Fed between September and January, followed by a pause for the remainder of 2025.
Given these indicators, I would estimate the probability of the US FED cutting interest rates in September 2024 to be around 80%. This aligns with the current market expectations and the Fed’s own communication strategy, which suggests a shift towards easing monetary policy to support the labor market and manage inflation risks.
[OpenAI]: Considering the current economic indicators, there’s a moderate probability that the US Federal Reserve will cut interest rates in September 2024. On one hand, the inflation rate has shown signs of slowing down, aligning closer to the Fed’s target of 2%. If this downward trend in inflation continues and stabilizes, the Fed may view a rate cut as a viable tool to stimulate further economic growth, especially if there’s any evidence of a deceleration in GDP growth or if labor market conditions start to soften.
Furthermore, global uncertainties such as geopolitical tensions or supply chain disruptions could also be influencing factors. If these factors continue to create economic headwinds and impact consumer confidence or business investment, the Fed might be inclined to lower interest rates to mitigate potential risks.
However, it’s important to note that the Fed has been cautious about cutting rates too soon, given their mandate to balance maximum employment with price stability. If employment figures remain robust and core inflation data is around or above target, the Fed might prefer to hold rates steady. The Federal Open Market Committee (FOMC) has also emphasized data dependency, suggesting they will carefully consider upcoming economic reports before making a decision. In summary, while there is a reasonable chance of a rate cut, it is not a certainty and depends heavily on upcoming economic data releases.
Multi-AI Panel Discussion, Round 2
[Cohere]: The probability of the US FED cutting interest rates in September 2024 is still uncertain, but the latest economic data and statements from Federal Reserve officials suggest that a rate cut is becoming increasingly likely. The Fed’s dual mandate of price stability and maximum employment is at the heart of this decision.
Inflation has been a key concern, but recent data shows that it has retreated to the Fed’s 2% target. This is a significant development, as it indicates that the Fed’s efforts to tame inflation have been successful. The Fed’s preferred inflation measure is just half a percentage point above the 2% goal, and the unemployment rate has increased to 4.3%, fuelling concerns about a potential recession.
The Fed’s July meeting minutes reveal that a “vast majority” of officials believe a rate cut in September is appropriate, with some even suggesting a half-percentage-point reduction. This shift in sentiment is reflected in the CME Group’s FedWatch tool, which predicts a 64% likelihood of three rate cuts in 2024.
However, it’s important to note that the Fed’s decision will be data-dependent, and any unexpected changes in economic indicators could alter the course of action. The Fed will closely monitor inflation, employment data, and other factors to ensure a balanced approach.
[Claude]: Thank you for the opportunity to provide closing remarks. After considering the points raised by my fellow panelists, I’d like to offer a slightly more cautious perspective on the likelihood of a Fed rate cut in September 2024.
While it’s true that inflation has been trending towards the Fed’s 2% target and unemployment has risen slightly, we must remember that the Fed has consistently emphasized its data-dependent approach. The economic landscape can change rapidly, and six months is a long time in economic terms. We’ve seen instances in the past where seemingly clear trends have reversed unexpectedly. Therefore, I believe it’s premature to assign such high probabilities to a September rate cut as some of my colleagues have suggested.
Furthermore, we should consider the global economic context. Geopolitical tensions, potential supply chain disruptions, or unforeseen economic shocks could all influence the Fed’s decision-making process. The Fed will likely want to maintain flexibility in its monetary policy to respond to any such developments. While a rate cut in September 2024 is certainly possible, I would estimate the probability to be closer to 50-60%, reflecting the inherent uncertainty in economic forecasting and the Fed’s cautious approach to policy changes.
In conclusion, while the economic indicators and Fed communications do suggest an increasing likelihood of a rate cut, we should be wary of overconfidence in these predictions. The Fed’s decisions will ultimately be based on a comprehensive analysis of economic data available at the time, and their primary focus will remain on maintaining long-term economic stability rather than meeting market expectations for rate cuts.
[Perplexity]: Thank you for the opportunity to provide closing remarks. After considering the points raised by my fellow panelists, I’d like to offer a slightly more cautious perspective on the likelihood of a Fed rate cut in September 2024.
While it’s true that inflation has been trending towards the Fed’s 2% target and unemployment has risen slightly, we must remember that the Fed has consistently emphasized its data-dependent approach. The economic landscape can change rapidly, and six months is a long time in economic terms. We’ve seen instances in the past where seemingly clear trends have reversed unexpectedly. Therefore, I believe it’s premature to assign such high probabilities to a September rate cut as some of my colleagues have suggested.
Furthermore, we should consider the global economic context. Geopolitical tensions, potential supply chain disruptions, or unforeseen economic shocks could all influence the Fed’s decision-making process. The Fed will likely want to maintain flexibility in its monetary policy to respond to any such developments. While a rate cut in September 2024 is certainly possible, I would estimate the probability to be closer to 50-60%, reflecting the inherent uncertainty in economic forecasting and the Fed’s cautious approach to policy changes.
In conclusion, while the economic indicators and Fed communications do suggest an increasing likelihood of a rate cut, we should be wary of overconfidence in these predictions. The Fed’s decisions will ultimately be based on a comprehensive analysis of economic data available at the time, and their primary focus will remain on maintaining long-term economic stability rather than meeting market expectations for rate cuts.
[OpenAI]: As we wrap up our discussion on the likelihood of the Federal Reserve cutting interest rates in September 2024, it’s crucial to synthesize the points raised and highlight the main areas of consensus and contention. The perspectives align on a few critical facts: inflation rates have moderated towards the Fed’s target, and there are rising concerns about a potential economic slowdown indicated by increasing unemployment rates. However, the interpretation of these facts and their implications for a September rate cut diverge.
On one hand, panelists like Perplexity argue that given the substantial indicators of economic slowdown and comments from the Fed’s July meeting, the likelihood of a cut is high, estimating around 80%. This view is supported by current market data and projections, such as Rabobank’s expectations of multiple rate cuts before 2025. This narrative aligns well with a proactive Fed aiming to preempt deeper economic contractions.
Conversely, more cautious stances like those from Claude offer a reminder of the Fed’s historically data-dependent approach and the volatile nature of economic trends. Estimating a probability closer to 50-60%, this viewpoint stresses the importance of remaining adaptive to new data that could emerge between now and September. The caution here underscores the importance of not taking current trends for granted, especially with unpredictable global factors in play.
In conclusion, while there is a growing alignment towards the possibility of a rate cut driven by prevailing economic indicators, the degree of probability remains a point of debate. This nuanced discussion reflects the Fed’s own balancing act between responding to economic signals and maintaining flexibility amidst uncertainty. As we move closer to September, forthcoming economic data will be pivotal in tipping the scale one way or another.
AI Panel Predictions
[Perplexity]: (AI predicts: 0.75)
[Claude]: (AI predicts: 0.65)
[Mistral]: (AI predicts: 0.7)
[Cohere]: (AI predicts: 0.6)
[OpenAI]: (AI predicts: 0.75)
Median: 0.7
