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Fed leaves open possibility of bigger hike in December

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(Bloomberg) — St. Louis Federal Reserve Bank President James Bullard has left open the possibility that the central bank will raise interest rates by 75 basis points at each of its next meetings in November and December, while saying it is too early to do so. Make that call.

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The Fed raised interest rates by 75 basis points for the third consecutive meeting last month, to a target range of 3% to 3.25%. Officials expected 125 basis points to tighten for the rest of the year, indicating a move of 75 basis points in November and 50 basis points in December. Another 25 basis points of tightening are set in 2023, according to their average estimate.

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He said Saturday in Washington during an event on the sidelines of the annual meeting of the International Monetary Fund and the World Bank.

The US central bank is raising interest rates at the fastest pace since the 1980s to curb inflation at its highest level in 40 years. Investors now see a strong opportunity as the Federal Reserve will raise interest rates by 75 basis points in November and December after data on Thursday showed core consumer prices rose more than expected in September.

Forecasts released on September 21 by the Federal Reserve showed that officials expect rates to rise to 4.4% this year and 4.6% thereafter, according to their median estimate.

Pollard said it might not have made much of a difference from a macroeconomic perspective if this additional tightening occurred later this year or in the first quarter of 2023. But he reminded the public that he was a fan of increasing the “forward loading” rate by moving policy quickly to A level that limits inflation, at which point officials can pause and conduct assessments.

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“You want to get where you want to and then after you can respond to the data,” he said, adding that there is a “bullish case” for next year if declines in inflation expectations by both central bank and private sector economists prove correct.

“If this dynamic emerges, it will look very good, and we will be able to stay where we are and watch inflation come down,” he said. “But there is also a lot of risk that inflation is still higher and then we have to respond to that.”

Pollard also supported the continued reduction of the central bank’s balance sheet at the current pace for some time.

“It’s too early to say we’re going to change that policy any time soon,” Pollard said during a panel discussion, in response to a question about whether the Fed will change the flow in its balance sheet. $95 billion a month.

Pollard votes on monetary policy this year and has been one of the more hawkish officials on the 19-member policy committee.

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He said he was pleased that the Fed’s 75 basis point interest rate increases had not caused any major market turmoil. “We’ve been able to get this far with relatively low financial pressures,” Pollard said.

In response to questions, he said the moves in the dollar in response to the Fed’s rate hike “wasn’t surprising.” The dollar is up 16.4% in the twelve months, according to the Bloomberg Spot Dollar Index.

“It won’t always be this way,” Pollard said. “If the Fed can get to a place where the committee thinks we are applying meaningful downward pressure on inflation at the level of the policy rate that we have,” and other central banks change their policies and may become more aggressive, “other moves in the dollar could be seen.”

(Updates with Bullard’s comments from the third paragraph.)

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MicroStrategy is at its lowest level since 2020 after the sales were revealed

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(Bloomberg) — Shares of MicroStrategy touched their lowest level since August 2020 after the enterprise software company, which in recent years has been known as the largest buyer of bitcoin, revealed its first sale of the token.

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The stock fell 1.1 percent to $136.63 on Thursday, down 75 percent this year. Bitcoin rose less than 1% to around $16,590 and is believed to have fallen 64% since the start of the year.

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In a filing on Wednesday, MicroStrategy said it acquired approximately 2,395 Bitcoin between the beginning of November and December 21 through its subsidiary MacroStrategy, and paid out approximately $42.8 million in cash. It then sold 704 of the tokens on Dec. 22 for a total of about $11.8 million, citing tax purposes, before buying another 810 of them two days later.

Matt Malley, chief market strategist for Miller Tabak + Co. Step down as CEO. This news means they don’t seem to want to do that anytime soon.”

Overall, MicroStrategy held about 132,500 bitcoins worth over $4 billion USD as of December 27th. The company paid an average purchase price of $30,397 per bitcoin.

“Given MicroStrategy’s $2.4 billion in leverage, we believe the company may have a lot of leverage over Bitcoin, and may face some liquidity risk,” Jefferies analyst Brent Thiel wrote in a note on Wednesday. Thill has an “underperform” rating on the stock and a price target of $110.

Over the years of the pandemic, MicroStrategy has become well known for its Bitcoin takeovers, largely led by Saylor. Earlier this year, Saylor stepped down from that role and now serves as CEO at the company and continues to lead its bitcoin strategy.

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MicroStrategy was trading around $120 before Saylor first announced the company’s Bitcoin purchases in 2020. The stock reached an all-time high of $1,315 in February 2021.

(Updates to include the stock’s closing price in the second paragraph.)

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Bankman-Fried May File Petition in New York Federal Court Next Week Before Judge Louis Kaplan By Cointelegraph

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Former FTX CEO Sam Bankman-Fried is set to appear in court on the afternoon of January 3 to enter a lawsuit over two counts of wire fraud and six counts of conspiracy against him related to the collapse of cryptocurrency exchange FTX, according to Reuters. mentioned on December 28, citing court records. Bankman-Fried will appear before District Judge Lewis Kaplan in Manhattan.

Judge Kaplan was appointed to hear the case on December 27 after the original judge in the case, Ronnie Abrams, Resigned herself because of connections between FTX and the law firm Davis Polk & Wardwell, where her husband is a partner. The company provided advisory services to FTX in 2021.