TD Securities has revised its Federal Reserve call after previously expecting the central bank to stay on hold for the rest of 2026. In a note published Friday, strategists including Oscar Munoz and Gennadiy Goldberg said they now expect the first rate increase in September, followed by two more hikes in October and January next year. The team also said the Fed may not offer forward guidance, though its dot plot should lean hawkish. The shift came after U.S. August CPI came in above expectations on Friday, prompting traders to raise expectations for near-term Fed tightening. TD Securities said the inflation report showed a lack of progress on inflation and led the firm to expect the Fed to start the hiking cycle in September.
TD Securities strategists said Friday that they now expect the Federal Reserve to deliver the first of three rate hikes in September, dropping their previous call that the central bank would remain on hold for the rest of 2026.
In a research note published Friday, strategists including Oscar Munoz and Gennadiy Goldberg wrote: "We expect a total of three hikes in this cycle, with the next two increases coming in October and January next year. The Fed may not provide forward guidance, but the dot plot should tilt hawkish."
The change in outlook came after U.S. August CPI was released above expectations on Friday. That data pushed traders to raise their expectations for near-term Fed rate hikes.
The strategists also wrote: "After the August CPI showed a lack of progress on inflation, we expect the Fed to begin its hiking cycle in September."
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