TD Securities Upgrades Fed Rate Hike Forecast Amid Strong Inflation Data

TD Securities has revised its forecast for Federal Reserve interest rate hikes in response to stronger-than-expected US inflation data. The firm's strategists, Oscar Munoz and Gennadiy Goldberg, previously predicted no interest rate hikes through the end of 2026 but now expect a total of three rate hikes beginning in September.

The first hike is expected in September, followed by two more in October and January 2027. The institution notes that while the Fed may not provide clear guidance on future interest rates after its meeting, the dot plot could reveal a hawkish outlook.

The forecast revision stems from the US August consumer price index (CPI) data exceeding expectations, indicating concerns about inflation's pace of decline and increasing market expectations for short-term Fed action.