On Thursday, the European Central Bank reduced interest rates and took other unorthodox steps to try to boost ultra-low inflation and invigorate the economy of the 18-country eurozone.
For the first time, the ECB will start charging banks for depositing money at the central bank. This step — called a negative deposit rate — is intended to prod banks to lend rather than hoard cash. The ECB also cut its main interest rate, the refinancing rate.
Inflation in the eurozone is running at only 0.5 percent, far below the ECB target of just below 2 percent.
Here are steps that major central banks around the world have taken to try to bolster their economies:
— EUROPEAN CENTRAL BANK
Interest rates: Cut its benchmark rate to 0.15 percent, a record low. And it reduced its deposit rate to negative 0.1 percent — the first time the ECB has imposed a negative deposit rate.
Other policies: The ECB said it will offer long-term low-rate loans to banks until 2018. The loans would come with a fixed rate that couldn't rise even if the ECB raises its benchmark rate. The ECB also said it will begin preparations for buying batches of loans made to private businesses. This step would be intended to stimulate more lending to small companies. It also said it will change the amount of deposits it takes from banks to leave an extra 175 billion euros in the financial system. In addition, Mario Draghi, the ECB's president, didn't rule out taking a more radical step eventually: Large-scale purchases of bonds to inject new money into the economy and boost inflation.
— FEDERAL RESERVE
Interest rates: The Fed is steadily paring its bond purchases as the U.S. economy has shown steady improvement. The Fed's bond purchases have been intended to keep long-term interest rates low to stimulate borrowing and spending. Yet even after the Fed ends its purchases, likely this fall, it says it will continue to keep short-term rates low to support the economy "for a considerable time." Most economists expect no short-term rate increase before mid-2015 at the earliest.
Other policies: The Fed has said that even after the job market strengthens and it starts raising rates, it will do so only gradually. Chair Janet Yellen has also stressed that the Fed's rate policies must be flexible enough to meet unexpected economic challenges. In addition, Fed officials have stressed that the central bank will keep reinvesting the interest from the bonds already on its books. That means that while the Fed's support for the economy won't be rising, it will remain substantial.