Fed response expected after Sandy, similar to Katrina | OANDA Forex Blog
How Will the Fed React to Sandy? - CNBC
There’s already talk on Wall Street about the possibility of the
Federal Reserve providing further monetary accommodation in response to
the damage wrought by Sandy.
With the Fed Funds target rate at zero, this could mean larger
quantitative easing asset purchases or a focus on buying different
financial assets by the Fed.
One trader even described what he thinks the Fed will do as “QE Sandy.”
If history and economic theory are guides to Fed policy, however,
those counting on further accommodation may be in for a shock. It’s very
possible—even likely—that Sandy will mean Fed policy might be tighter
than it might have otherwise been. And that’s because Sandy’s
side-effects might well accomplish the very things that Ben Bernanke has
been hoping that his quantitative easing policy would.
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