TD Securities Revised Its Fed Interest Rate Forecast Following Today’s Inflation Data

TD Securities has significantly revised its Federal Reserve forecast following stronger-than-expected inflation data in the US. While the firm’s strategists previously predicted the Fed would keep interest rates stable for the remainder of 2026, they now expect a total of three rate hikes, beginning in September.

In a research note, TD Securities strategists Oscar Munoz and Gennadiy Goldberg stated that they predict the Fed will implement its first interest rate hike in September, followed by two more hikes in October and January 2027.

Strategists stated, “We expect a total of three interest rate hikes in this cycle. We anticipate the next two hikes to occur in October and January of next year.” The institution also believes that the Fed may not provide clear guidance on the future course of interest rates after the meeting, but that the dot plot, which shows officials’ interest rate expectations, may reveal a hawkish outlook.

US Inflation Changes FED Expectations

TD Securities’ forecast revision stems from the US August consumer price index (CPI) data exceeding expectations. The higher inflation figure increased concerns that the decline in price pressures is not progressing at the desired pace, while also strengthening market expectations of a possible Fed interest rate hike in the short term.

In their report, strategists stated, “Following the August CPI data showing a lack of progress on inflation, we expect the Fed to begin its interest rate hike cycle in September.”

*This is not investment advice.