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TD Securities: Fed likely holds rates through 2026 on inflation risks

TD Securities says the June FOMC minutes were hawkish, with participants open to hikes if supply-driven inflation persists.

Reported · Written up by our desk · Central Banks

TD Securities economists Oscar Munoz and Eli Nir point to hawkish June FOMC minutes, saying most participants were ready to hike if supply-driven inflation continues. They also argue the Fed has reasons to stay cautious even as the labor market stabilizes.

The firm projects the Fed will keep rates on hold through 2026, citing output growth that they expect to move sideways. They also flag stagflationary risks tied to the Iran conflict as a factor that could keep inflation elevated.

FXStreet notes that the broader market backdrop is shaped by the outlook for rates, while the article highlights currency and commodity moves linked to a stronger US dollar. It also references upcoming US CPI data and Fed Chair Warsh testimony as potential catalysts for expectations.

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