ECB Restarts QE, Lowers Deposit Facility Rate to -0.5%

ECB Restarts QE, Lowers Deposit Facility Rate to -0.5%

Assessment

Interactive Video

Business

University

Hard

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The video discusses the European Central Bank's (ECB) recent monetary policy decisions, including a 10 basis point interest rate cut and the restart of quantitative easing (QE) with a €20 billion monthly bond purchase starting November 1st. The ECB's actions were less aggressive than market expectations, which anticipated larger QE and earlier implementation. The impact of these decisions on banks, particularly the cost of negative interest rates on excess reserves, is also analyzed.

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5 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What was the market's expectation for the basis point cut, and what was the actual decision?

20 basis points expected, 10 basis points cut

10 basis points expected, 30 basis points cut

10 basis points expected, 20 basis points cut

30 basis points expected, 10 basis points cut

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the monthly amount of debt the ECB plans to purchase starting November 1st?

€10 billion

€20 billion

€30 billion

€40 billion

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How does the ECB's QE plan compare to Bloomberg's expectations?

It is larger but starts later

It is larger and starts earlier

It is smaller and starts later

It is the same size but starts later

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the estimated annual financial impact of the negative deposit rate on European banks?

€7 billion

€10 billion

€12 billion

€5 billion

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What percentage range have analysts suggested for the tiering system?

35% to 50%

50% to 60%

25% to 35%

10% to 20%