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TD Securities' US macro team, led by Oscar Munoz and Eli Nir, forecasts the Federal Reserve will maintain the Fed funds rate at 3.50–3.75% in March 2026 and extend the pause through Q3 2026. This projection is driven by the ongoing oil price shock, which complicates inflation dynamics and delays the Fed's ability to tighten monetary policy. The team argues that elevated energy costs are likely to keep core inflation above target, reducing pressure on the Fed to raise rates. For markets, this signals prolonged accommodative policy, which could support risk assets and weaken the US dollar. Traders should monitor oil price trends and upcoming inflation data for clues on the Fed's timeline. The extended pause may also influence global capital flows, particularly in emerging markets, as dollar weakness becomes a tailwind for equities and commodities.
