Strategists at TD Securities have abandoned their previous projection of the central bank holding steady, now forecasting that the Federal Reserve will initiate the first of three rate hikes in September. This marks a significant pivot from their earlier view that the monetary authority would remain on hold for the remainder of 2026.

In a research note released on Friday, a team including Oscar Munoz and Gennadiy Goldberg stated they expect a total of three increases in this cycle, with subsequent moves arriving in October and January. While the Fed may avoid offering explicit forward guidance, the strategists noted that the dot plot is likely to skew toward a hawkish posture.

The revised outlook follows the release of August consumer price index data on Friday, which came in higher than anticipated. The stronger-than-expected inflation reading has prompted traders to ramp up their bets on imminent policy tightening by the U.S. central bank.

According to the strategists' report, the lack of progress on inflation evidenced by the August CPI figures has solidified their expectation that the Fed will kick off its tightening campaign at the September meeting.