The danger of the New York Hurricane has only just passed, and there is already talk on Wall Street about the possibility that the Federal Reserve (Fed) will have to provide further monetary stimulus for the damage caused by Hurricane Sandy.
This could mean that there will be even greater quantitative easing (QE) for asset purchases or the Fed's focus on buying various financial assets. One trader on the stock exchange even called this the 'QE Sandy'.
History and economic theory along the lines of the Fed would make such a stimulus of the Fed quite possible.
The material damage to the buildings and infrastructure is estimated at more than 15 billion euros. In addition, economic growth across the country is suffering from the consequences. Shops and factories remain closed. The damage continues to increase daily. Today, on November 1st, it is already estimated that there will be a permanent financial damage of 10-15%. Gross domestic product is expected to fall by 0.6 percentage points.
After Hurricane Katrina, the expectation was that the Fed would take action. This reinforces the idea that this is certainly possible in this case.
Source: cnbc.com