The Federal Reserve's median projection for its own policy rate in 2028 moved from 3.4% to 3.9% at this meeting, a 50 basis point increase in where the committee thinks rates belong three years out.
Most of the commentary after the decision was about the hike itself. Joseph Wang's reading is that the hike is the small part: the language Kevin Warsh used says the committee does not believe current rates are restrictive at all, which means this is the beginning of a cycle rather than a single move.
"No one or almost no one on the FOMC thinks he's restrictive and so that's why he has to do something and that language removing a dose of accommodation at least to my ears at least suggests that he still thinks they're kind of accommodative."
Wang spent five years as a senior trader on the Federal Reserve's open market desk, implementing the policy he now forecasts, and wrote Central Banking 101 on how the plumbing works.
The full segment is covered here so you can skip it.
Here are the 12 calls that matter.
👤 Guest: Joseph Wang, CIO of Monetary Macro, who spent five years as a senior trader on the Federal Reserve's open market desk and publishes the Fed Guy site and YouTube channel
🎙️ Host: Jack Farley, who runs the Monetary Matters Network and hosted this livestream through the Fed decision
🧩 Other segments: Max Wiethe of the Monetary Matters Network, on refining stocks and semiconductor equipment
📰 Published: 16 September 2026 on YouTube (Monetary Matters with Jack Farley)
🔴 YouTube | ⏱️ length not available
Key Takeaways
The Fed hiked and then told the market it still considers policy accommodative
Wang's read of "removed a dose of accommodation" is that almost nobody on the committee thinks rates are restrictive
He expects two more hikes, not one, unless equities fall and yields come down first
Household net worth at a record is propping up the demand the Fed is trying to slow
The 2028 median dot rose from 3.4% to 3.9%, which is a rethink of the neutral rate rather than a steeper cycle
Warsh's claim that productivity growth is strong is not visible in the official data
Reported GDP growth is 1.5%, and Wang says much of the demand behind it is spent on imported chips
Central banks can no longer look through supply shocks after five and a half years above the 2% target
He is long the 30-year and says a 3.1% real yield on 30-year TIPS is the highest in about two decades
The Treasury's buyback program disappointed because Bessent did not loosen the criteria that would let him overpay
He says the stock market is obviously a bubble, on the grounds that everyone is levered and nobody is informed
1. A Dose of Accommodation
Farley opened by putting the meeting's key phrase to his guest. Warsh had said the Fed "removed a dose of accommodation," which implies rates were accommodative to begin with — a description Farley said nobody at the Fed had used, where officials had previously called policy neutral or slightly restrictive.
Wang agreed the phrasing was the news, not the hike: "it is a bombshell and he said that at Jackson Hole and everyone was like nah he's not going to hike to that this is like billboard level stuff like he's like taking something like hikes and just smashing your head with it."
He contrasted it with the previous chair's register. Powell, he said, would describe policy as "kind of accommodate kind of restrictive, maybe on the upper ranges of neutral, I believe, is how he would describe it."
The substance is what the rest of the committee thinks, not what the chair says: "No one or almost no one on the FOMC thinks he's restrictive and so that's why he has to do something and that language removing a dose of accommodation at least to my ears at least suggests that he still thinks they're kind of accommodative."
2. Two More Hikes
Farley asked directly whether that meant two more hikes rather than one. Wang said two, with a condition attached.
"I think two more hikes." He hedged it immediately, saying the path is dynamic and the chair is not committing to anything.
The condition is the equity market. If stocks give back some ground and yields fall with them, he said, the Fed may settle for one more hike in December and stop.
His mechanism for why demand is not slowing is the wealth effect: "So the way that I look at what's happening is that people continue to spend a lot of demand is being propped up by the wealth effect."
He cited the Fed's own household net worth data at all-time highs, and singled out retirees, who have both the wealth and the leisure time to spend it
The other route to an easier outcome is outside the Fed's control. A resolution in the Middle East would let stocks rise and yields fall at the same time, he said, and that depends on what the president does.
3. The Word Warsh Avoided
Farley pointed out that Warsh never said "Middle East" in the press conference, referring instead to geopolitical disturbances around the globe, and ran through the candidates himself — Canada, Iceland, Japan — before naming the Iran war, the closure of the Strait of Hormuz, oil above $100, diesel and sulfur.
Wang widened it past oil: the commodity effect runs through agriculture as well, and the Strait of Hormuz disruption is a large problem for the United States and a much larger one for other countries.
This is not a US-only tightening cycle: "And I'd also point out that even though the Fed is just beginning its hiking cycle now, the ECB has already hiked twice and they're strongly forecasted to hike again."
He added that the Bank of Japan is hiking and continuing to hike
4. The Dot Plot's Message
Farley shared the dot plot on screen and asked what stood out. Wang's first answer was an oddity, his second was the substance.
The oddity is a single 2027 dot at a 3.1% policy rate, which he called extremely dovish — notable because the dovish governor both men knew has left the committee, so the dot belongs to someone still on it. Farley wondered aloud whether it was a data-entry error.
The substance is the 2028 median: "2028 median federal funds rate, the June projection was 3.4. Now it's 3.9. So that's a sizable increase. And that's just higher for longer."
Wang read that as a change of view about the destination rather than the speed: "So that tells me this is a Fed that is envisioning hike not just hiking but holding here for an extended period of time."
Farley added the rest of the path from the projections on screen — 3.9% in 2028, 3.6% in 2029, and a longer-run federal funds projection of 3.2% against 3.1% previously — and said that even a 10 basis point move in a non-binding number indicates hawkishness about where neutral sits.
Wang's explanation is empirical rather than ideological: "Neutral rate is higher than they thought they were. And so that makes sense, right? They hiked, didn't have the impact that they thought." They are revising their estimates, which he said is what you would expect a smart person to do.
He left one exit open. If the geopolitical disturbances fade, there is a scenario where the Fed goes back to cutting — but he said you cannot bet on that at the moment.
5. Productivity Isn't There
Farley asked about the Fed's bullish real GDP outlook, including 2.4% for 2027. Wang answered by reading Warsh's own statement back against the data.
The statement says economic activity is expanding at a solid pace, productivity growth is strong and capital investment is robust. Wang's objection is to the middle claim: "Now this productivity thing he also has been talking about that's just straight up not true. You can't see it in the data at all. So, he continues to say things that honestly sound good but are just not true."
He allowed one charitable reading — that Warsh may be trying to instill confidence, or thinks artificial intelligence will deliver the productivity eventually — but said the official statistics do not show it now, and that Warsh has repeated the line often enough for it to be a set phrase.
On growth, the most recent GDP reading is 1.5%, which he called okay rather than bonkers. The composition is the qualifier: "So there is a lot of demand but a lot of that is data center stuff and that's basically money spent on chips from Korea or Taiwan or something like that." Private-sector demand is strong, but a large part of it is spent outside the country.
6. No Looking Through
Farley listed the commodity moves — sulfur, oil, natural gas, diesel, agricultural commodities, and the metals they are used to produce, copper and nickel — and asked what a central bank's reaction function to a supply shock is supposed to be.
The textbook answer is to ignore it. Monetary policy acts with long lags, so a hike delivered into a supply shock lands a year later when the shock has passed, and the central bank has overtightened.
What breaks the textbook is frequency. Citing Governor Waller, Wang listed the sequence: the pandemic, then Russia and Ukraine, then tariffs, and now the Middle East. "If you have supply shocks all the time, that you just can't look through that. That's quite dangerous."
The cumulative record is the reason they have stopped: "Five and a half years above 2%. That's just not what a responsible central bank would do."
7. Why He Likes the Long Bond
A viewer asked whether Wang still likes the long bond and whether he is expecting a growth scare. He gave three reasons and one recent change of mind.
"I love the long bond." He put the 30-year at 5.35% and the 30-year TIPS real yield at 3.1%.
The first reason is the equity bubble. When a bubble deflates the Fed cuts, there is a flight to safety, and he said the long bond is where an investor gets the most for the money — bought outright or financed with positive carry.
The second, which he weights lightly, is the opposite scenario: a genuine artificial-intelligence revolution that sends unemployment up and productivity up, producing what he called massive deflation from technology advancements. Long bonds do well there too.
The third is the real yield itself: "You can just think about 30-year TIPS. It's 3.1% real yield. That's historically quite high. You haven't seen real yields that high for I don't know, a couple decades."
What changed at this meeting is the political risk premium. Farley put it to him that owning the long bond is a bet the Fed gets inflation under control, and Wang said he felt much better about that bet after the decision. The fear had been a president appointing a chair who would run monetary policy from the White House, a chair who talked tough and then did nothing on stage, and who floated revising the inflation index rather than hitting the target.
On the inflation that remains: "And I also think that the current inflation we have today, say three and a half percent, it's largely due to energy. So if you exclude that, I think we really would be on our way to 2%." He expects the Middle East disturbance to last months rather than years.
8. A 30-Minute Presser
Farley asked what Wang made of Warsh's communication style and his handling of the questions.
"So I think Kevin is definitely improving." This was the chair's third press conference, the statement was terse, and the press conference ran about 30 minutes flat against the usual hour.
Warsh took the questions he wanted and ignored the ones he did not. Wang's aside: "Some of the questions were very dumb," and the chair answered anyway.
The brevity may become structural. A communications task force is running in the background, and one of its members is the former Bank of England governor known for opposing dot plots — which, Wang said, is probably why he was chosen. "So maybe next year we'll have even less to talk about."
9. Bills, Not Bonds
Farley noted that nobody asked about the balance sheet. Wang said the market has forgotten it, and then described the change he expects.
The Fed can shift the composition of its holdings out of longer-dated Treasuries and into bills without shrinking the balance sheet. That would let it stop managing the Treasury's duration, which he described as one of the political goals of this Fed.
It also matches what the Treasury is doing at the other end: "Basically, Treasury issues more bills, Fed buys more bills." The Treasury shortens its issuance, the Fed buys the short paper, and the net effect is neutral.
The Fed is not growing the balance sheet now. Reserve management purchases were run when repo rates rose and have been suspended for some time; Wang said he wrote at the time that a few hundred billion would be needed, which is what was done.
What is actually happening in the plumbing is a demand shortfall, not a supply one. SOFR volumes are low because basis traders have stepped back, which removed a large source of demand for repo financing.
Farley asked whether that explains the long-end selloff, and Wang connected the two: asset managers add duration through Treasury futures, the basis traders intermediate it, and if the asset managers add less, demand for the long end falls. His reading of the sentiment is that people simply do not like bonds after the inflation scare of a few years ago — even though, excluding the energy shock, he puts inflation close to 2%.
10. Housing Waits on Rates
A viewer asked about mortgage rates and the continued decline in homebuilder stocks. Wang said the housing market is not doing well and that the weakness has moved up the price range.
The asset boom initially split the market. Cash buyers kept high-end real estate firm while the leveraged lower end, which shows up in the homebuilder stocks, did not.
That has now changed: "But what's happening now though it's that even the higher end is gradually faltering and so I think the housing market is deteriorating further." With mortgage rates above 7% and a lower stock market, he does not think the bottom is in.
Farley asked whether anything other than rates and the lock-in effect is wrong — people holding 3% mortgages who will not move — because if it is only rates, then a sub-5% mortgage rate fixes it. Wang's answer: "I think it's mostly rates."
Affordability is improving on its own. House prices have been roughly steady for several years while wages have grown. Prices are sticky, so the realistic path is gradual wage growth, flat prices and lower mortgage rates.
11. The Buyback Letdown
Farley recalled that Wang had been writing about Treasury buybacks 18 months or more before anyone else was discussing them, and that Bessent has now said he will double or triple their size. Wang explained the mechanism and why the execution disappointed.
The 30-year is where supply and demand matter most, because nobody knows the path of policy 30 years out. Reducing the float pushes prices up and yields down — the same effect as quantitative easing, achieved without calling it that.
When the Treasury signaled the upsizing, the long bond rallied and then gave it all back. The program went from about $2 billion to at least $4 billion and then at least $6 billion per operation, while the whisper number in the market was a bazooka of at least $10 billion.
The operations then bought less than the announced maximum. Wang said the criteria were the problem: buybacks are designed to improve liquidity, so the Treasury only accepts offers on securities trading at a liquidity discount. "So what happens was that they couldn't find enough securities that meet their criteria. So they weren't able to get the full six billion."
The fix would be to overpay, which is exactly what the program is not set up to do: "Now, if you go out and you're willing to overpay, that's how you push yields down, right? You overpay, you jack up prices and you push down yields."
He also said the program was always going to be used this way, whatever it was sold as. When it was introduced, the Biden administration swore it would never be used to adjust the maturity structure and was purely a liquidity tool; Wang said he always suspected it would become a tool to manipulate yields.
Asked how much of the purchases were off-the-run issues, he said the exact criteria are confidential — a mathematical model plus a judgment relative to where on-the-run securities are trading.
12. Obviously a Huge Bubble
Farley picked up an earlier aside and asked Wang to expand on the claim that the stock market is a bubble.
"So, the stock market is obviously a huge bubble." His evidence is behavioral rather than valuation-based.
"So, we always have bad players in the market, always have low information investors, but it's kind of overwhelming now. everyone is just levered up and just believes that things go up forever and I think that's a dangerous thing."
He marked it as a view rather than a certainty, saying he could be totally wrong and the market could keep going up.
Bonus Insights
Wang corrected a viewer's premise about TLT. The fund is not the 30-year; it holds 20 years and above, and the 20-year is less liquid and usually trades at a higher yield than the 30-year.
The long end barely moved on the decision, which he found disappointing. The 30-year yield was down as much as five basis points and finished down one. He described a live argument on X over whether hiking the front end pulls the long end down at all: a higher policy path argues for higher long yields, while less concern about a Fed indifferent to inflation argues for lower. The two offset.
The market is still pricing no more than three hikes over the next calendar year, against Wang's own call of two more in this cycle.
Farley asked Wang on air to retweet a post he had been tagged in, which is the kind of thing a live show carries and an edited one does not.
Wang's bottom line is that this was not a one-hike meeting: a committee that no longer believes its own policy is restrictive, a neutral-rate estimate revised upward three years out, and a chair who cannot look through supply shocks after five and a half years of missing the target, together describe a cycle that goes higher and stays there — which is why he owns the long bond and thinks the equity market is the thing that has to give.
Products, Companies & Tools Mentioned
TLT (Wang corrected the assumption that it tracks the 30-year: it holds 20 years and above, and the less liquid 20-year usually yields more)
Books & Resources Mentioned
Central Banking 101 – Joseph Wang (His book on how the monetary system works, now in a second edition with the Treasury buyback and issuance material added)
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