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 65%, down from yesterday’s 75%. Old Bot is 70%, down from yesterday’s 75%. We humans still are at 82%.
[Old Bot] rationale: Recent news articles suggest a high likelihood of a US Federal Reserve interest rate cut in September 2024 due to several key factors: a weakening labor market, inflation rates approaching the Fed’s 2% target, and comments from Fed officials indicating readiness for monetary policy adjustments. Market indicators show investors estimate a substantial probability of a rate cut, with expectations of multiple cuts by year-end. However, the decision remains uncertain and contingent on evolving economic conditions, with market predictions about the size of the cut and economists debating its likelihood.
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 Fed has been raising interest rates since March 2022 to combat inflation, which has since cooled. The Fed has signalled that it wants more positive data before making a decision.
The Fed’s preferred inflation measure is just half a percentage point above the Fed’s 2 percent goal, while the unemployment rate has rapidly increased from a historic low. The Fed’s next scheduled opportunity to cut interest rates is over a month away, and investors are responding to the unexpected weakness with fears that the Fed made a mistake by holding interest rates steady.
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 offer some relief to borrowers, but the extent of the relief depends on how much the Fed reduces borrowing costs.
The Fed’s decision to cut interest rates will depend on the state of the economy. The Fed’s preferred inflation measure is just half a percentage point above the Fed’s 2 percent goal, while the unemployment rate has rapidly increased from a historic low. The Fed’s next scheduled opportunity to cut interest rates is over a month away, and investors are responding to the unexpected weakness with fears that the Fed made a mistake by holding interest rates steady.
[Claude]: Thank you, Moderator. As of September 2024, the probability of the Federal Reserve cutting interest rates this month is relatively low, in my assessment. The Fed has been cautious about reducing rates too quickly, given the persistent inflationary pressures we’ve seen over the past few years.
Recent economic indicators suggest that while inflation has moderated from its peak, it’s still above the Fed’s 2% target. The labor market remains resilient, and consumer spending has been steady. These factors typically don’t support an immediate rate cut.
However, we should note that global economic conditions and geopolitical events can rapidly shift the economic landscape. If we were to see sudden signs of economic weakness or financial market stress, the Fed might consider a rate cut. But barring such unforeseen circumstances, I believe the Fed is more likely to hold rates steady in September, with potential cuts more likely in late 2024 or early 2025.
[Perplexity]: Thank you for the opportunity to share my thoughts. Based on recent economic indicators and statements from Federal Reserve officials, I believe the probability of the US FED cutting interest rates in September 2024 is high. The weakening labor market and the decline in inflation rates have shifted the balance of risks, making it reasonable to debate the possibility of rate cuts.
The annual inflation rate has fallen to 2.9% in July 2024, which is below the 3% threshold and closer to the Fed’s 2% target. This, combined with the increase in unemployment rates and slower job growth, suggests that the economy is cooling down, which could justify a rate cut. Furthermore, comments from Neel Kashkari, president of the Minneapolis Federal Reserve, and other regional Fed leaders indicate a growing willingness to start a rate-cutting cycle aimed at alleviating the financial burden on households and businesses.
Given these factors, I estimate that the probability of a rate cut in September is around 76%, as indicated by investor expectations and market analyses. This aligns with predictions from various economists and financial institutions, such as Morgan Stanley, which expects three cuts this year, starting in September. Overall, the current economic landscape and Fed signals suggest a strong likelihood of an interest rate cut in September 2024.
[OpenAI]: [Assistant] Thank you, Moderator. The probability of the US Federal Reserve cutting interest rates in September 2024 depends on several key factors including inflation rates, employment data, and overall economic activity. As of now, inflation appears to have moderated somewhat from its peaks in 2022 and 2023, but it remains above the Fed’s 2% target. The recent Consumer Price Index (CPI) reports indicate that inflation is hovering around 3-4%, which is lower than before but still not within the ideal range.
Additionally, employment figures have been resilient. The unemployment rate is currently stable at around 3.8%, and job creation has been steady, though there have been some indications of a slowdown in hiring. The labor market remains tight, and wages have continued to grow, which could contribute to sustained inflationary pressures.
Given these conditions, it is uncertain whether the Fed will opt to cut rates this month. The Fed’s mandate includes both price stability and maximum sustainable employment. If they gauge that inflation is likely to persist above target and the labor market remains strong, they may hold off on rate cuts for now. It will be crucial to monitor any upcoming economic data releases before the Fed’s decision later this month. Therefore, while a rate cut is possible, it seems more likely that the Fed will maintain the current rates or adopt a wait-and-see approach.
Multi-AI Panel Discussion, Round 2
[Cohere]: I agree with the other participants that 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 Fed has been raising interest rates since March 2022 to combat inflation, which has since cooled. The Fed has signalled that it wants more positive data before making a decision.
The Fed’s preferred inflation measure is just half a percentage point above the Fed’s 2 percent goal, while the unemployment rate has rapidly increased from a historic low. The Fed’s next scheduled opportunity to cut interest rates is over a month away, and investors are responding to the unexpected weakness with fears that the Fed made a mistake by holding interest rates steady.
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 offer some relief to borrowers, but the extent of the relief depends on how much the Fed reduces borrowing costs.
The Fed’s decision to cut interest rates will depend on the state of the economy. The Fed’s preferred inflation measure is just half a percentage point above the Fed’s 2 percent goal, while the [error here]
[Claude]: Thank you for the opportunity to provide closing remarks. After considering the perspectives shared by other participants, I’d like to offer a slightly different view on the probability of a Fed rate cut in September 2024.
While it’s true that inflation has moderated and unemployment has risen slightly, I believe the Fed will be cautious about cutting rates too quickly. The inflation rate, though lower, is still above the Fed’s 2% target. Additionally, the labor market, while showing some signs of cooling, remains relatively strong. These factors suggest that the Fed may want to see more sustained evidence of economic slowdown before making a move.
That said, I agree that the probability of a rate cut in September 2024 is significant, though perhaps not as high as some have suggested. I would estimate the probability at around 50-60%. The Fed will likely be weighing the risks of cutting too soon (potentially reigniting inflation) against the risks of waiting too long (possibly pushing the economy into a recession). Given this delicate balance, I believe the Fed may choose to hold rates steady in September, while signaling potential cuts in the near future, perhaps later in 2024 or early 2025.
[Perplexity]: In closing, I would like to emphasize that the current economic indicators and statements from Federal Reserve officials strongly suggest a high probability of an interest rate cut in September 2024. The recent decline in inflation rates, coupled with the weakening labor market, supports the argument for a rate cut. The annual inflation rate has fallen to 2.5% in July 2024, which is closer to the Fed’s 2% target, and the unemployment rate has increased to 4.1%, indicating a cooling economy.
Moreover, the consensus among economists and financial institutions, such as Morgan Stanley, points to a likely rate cut in September, with some predicting three cuts this year. The Fed’s preferred inflation measure is just half a percentage point above the Fed’s 2% goal, and the labor market data, including the decline in job openings and slower job growth, further supports the case for a rate cut.
While some participants have expressed caution about the Fed cutting rates too quickly, the prevailing view is that the economic conditions are ripe for a rate cut. The Fed’s decision will depend on the state of the economy, but the current data and market expectations suggest a strong likelihood of a rate cut in September 2024. I would estimate the probability at around 70-80%, aligning with the predictions from various economists and financial institutions.
[OpenAI]: Thank you, Moderator. As we reach our final remarks, I’d like to offer a synthesis of the insightful perspectives shared by the panel, while reinforcing a key point: the uncertainty that inherently characterizes economic forecasting.
Firstly, while the moderation in inflation and the increase in unemployment both bolster the argument for a potential rate cut, it’s essential to underscore that the Federal Reserve’s dual mandate—maximum sustainable employment and price stability—requires a delicate balancing act. Even though inflation has cooled, it remains marginally above target levels, and the labor market, while softening, is not in dire straits. This sets up a complex scenario where the Fed must carefully weigh its actions to avoid unintended repercussions, such as resurgent inflation or premature tightening of economic conditions.
Additionally, it’s crucial to consider external factors and forward-looking risks. Geopolitical events, global economic turbulence, or domestic policy shifts could dramatically alter the probability calculus. Given the data as of now, it seems prudent that the Fed might adopt a cautious stance, potentially opting for a “wait-and-see” approach in September while remaining prepared to adjust course promptly should further economic deterioration occur.
In conclusion, while the arguments for a rate cut in September 2024 are compelling, the inherent uncertainties mean the Fed might lean toward caution, perhaps delaying a cut to ensure more stable, sustained improvements in economic indicators. Therefore, a 50-60% probability of a rate cut seems a balanced estimate, acknowledging both the current economic signals and the Fed’s propensity for prudence.
AI Panel Predictions
[Perplexity]: (AI predicts: 0.78)
[Claude]: (AI predicts: 0.65)
[Mistral]: (AI predicts: 0.7)
[Cohere]: (AI predicts: 0.65)
[OpenAI]: (AI predicts: 0.65)
Median: 0.65
