TD Sees Fed Hiking in October and January

Because this call was made before the meeting, its real market significance now is whether it stands up to what the Fed actually signaled. TD's January projection is more aggressive than the Fed's own median dot, which indicates only one more hike this year rather than two, making the call currently more hawkish than the central bank's own guidance rather than confirming it.

If TD sticks with the sequencing in the coming days, it would join a small group, including Goldman Sachs, in pushing a timeline earlier than the December consensus most other major banks hold, bolstering the case for near-term dollar strength and pressure on rate-sensitive assets. If TD instead backs off the January leg once the dot plot's actual message sinks in, that would indicate the initial post-CPI shift was more about the inflation data than a considered take on the Fed's own reaction function.

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TD called for three Fed hikes before the Fed had even made its first move, and now that call has to survive the central bank's own dot plot.

Summary:

• TD Securities predicted ahead of yesterday's Fed meeting a total of three hikes this cycle: September, October, and January 2027
• The call reversed TD's previous expectation that the Fed would keep rates steady through the rest of 2026
• The change followed a hotter-than-expected August CPI report released the same week
• Strategists Oscar Munoz and Gennadiy Goldberg said they expected no explicit forward guidance from the Fed but a hawkish dot plot
• The September hike has since been delivered as expected, moving the fed funds range to 3.75% to 4.00%
• The Fed's dot plot pointed to only one more 2026 hike, putting TD's January call ahead of the central bank's median guidance; whether TD has updated the call since Wednesday's meeting is not yet clear

On September 11, five days before the Federal Reserve's meeting, TD Securities forecast a total of three rate hikes this cycle, reversing its prior call that the Fed would stay on hold for the rest of 2026. Strategists Oscar Munoz and Gennadiy Goldberg wrote that they expected the first increase at the September meeting, with the next two in October and January 2027.

The change came in direct response to the August CPI report released the same week, which was hotter than expected and raised fresh doubts about inflation progress toward the Fed's target. TD's strategists noted the data showed inflation had not slowed fast enough, and while they anticipated the Fed would avoid explicit forward guidance at the September meeting, they expected the accompanying dot plot to remain hawkish.

The call put TD among a broader set of major banks that had abandoned earlier expectations for the Fed to hold rates through the rest of 2026 after the same CPI report, though TD's specific timeline of three hikes ending in January 2027, rather than the more common two-hike, December endpoint forecast at the time, made it one of the more aggressive calls on the street heading into the meeting. The September hike has since been delivered as TD and most of the market expected, taking the fed funds range to 3.75% to 4.00%. What remains to be tested is the second half of TD's call, the specific timing of the October and January moves, against a Fed dot plot showing only one more hike this year rather than two, a detail that places TD's January forecast somewhat ahead of the central bank's median guidance.

It is not yet clear from available reporting whether TD has revisited or reaffirmed that October and January sequence since Wednesday's meeting and dot plot release, and any update the desk publishes in the coming days would be the new update, and would be the more immediate test of whether this call holds up against the Fed's own signalling.