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TD Securities expects Fed to stay on hold through 2026

TD Securities projects core CPI to end 2026 Q4 at 2.6% year over year, supporting an extended pause rather than a cut.

Reported · Written up by our desk · Central Banks

TD Securities expects the Federal Reserve to keep the fed funds rate unchanged through 2026, citing inflation that remains above target and a labor market that has stabilized.

The firm says the current policy outlook is shaped by a mixed backdrop from Fed communications and what it describes as a blurrier reaction function under new leadership, which would increase emphasis on incoming data.

TD Securities also believes that if the Fed were to change course this year, a rate hike is more likely than a cut, rather than easing policy.

In its update, the firm revised down its near term CPI path, forecasting core CPI to reach 2.6% year over year in 2026 Q4.

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