Washington: The Federal Reserve ended seven years of record low interest rates Wednesday.
After keeping the short-term rate it controls at zero to 0.25 percent since December 2008, the Fed raised it to 0.25 percent to 0.5 percent. In contrast, other big central banks are either cutting rates or embarking on stimulus programs to try to boost their struggling economies.
Here are steps that other major central banks have taken recently:
EUROPEAN CENTRAL BANK
This month, the ECB expanded its monetary stimulus as it tries to get inflation back toward its target. It cut the rate on deposits from commercial banks from minus 0.2 percent to minus 0.3 percent. That is intended to push banks to lend by imposing a penalty on the cash they park at the central bank.
The ECB chose not to boost the amount of government bonds it buys each month through its stimulus program, which aims to help the economy by cutting loan rates. Instead, it extended its bond buying for six more months at the same level — until March 2017.
The ECB wants to raise annual inflation toward its goal of just under 2 percent as part of its legal mandate to maintain price stability. Annual inflation in the eurozone stands at only 0.1 percent and has hovered around that level for a year or so. Central Bank President Mario Draghi says the bank is ready to expand its economic stimulus program if necessary.
BANK OF JAPAN
The central bank is spending trillions of yen (tens of billions of dollars) a month on asset purchases, seeking to spur inflation. Government data this week showed that the world's third-largest economy managed to sidestep recession last quarter: Revised data released Tuesday showed its economy grew at an annual 1.0 percent pace instead of shrinking. Extreme monetary easing has been the linchpin of the "Abenomics" economic revival strategy, along with strong government spending and sweeping reforms.
The revised growth figure makes it less likely that the Bank of Japan will deploy further monetary stimulus anytime soon, despite slow progress toward its goal of 2 percent inflation.
PEOPLE'S BANK OF CHINA
Chinese authorities have generally been cautious in tweaking monetary policy. But in November, the People's Bank of China cut interest rates on loans by small lenders that finance the country's entrepreneurs in a new move to shore up lackluster economic growth.
Beijing has cut its benchmark lending rate six times since last November as economic growth slowed. But those cuts applied to large state-owned banks that lend mostly to government companies, not to entrepreneurs who generate most of China's new jobs and wealth.
Communist leaders have affirmed their support for a "new normal" of slower, more self-sustaining growth based on domestic consumption instead of trade and investment. But they are trying to keep a 5-year-old economic downturn from deepening too sharply and causing a politically dangerous spike in job losses. Growth fell to a six-year low of 6.8 percent in the latest quarter, less than half the past decade's peak of 14.2 percent in 2007.
BANK OF ENGLAND
The British economy is one of the world's strongest developed economies. The International Monetary Fund expects Britain's economy to expand 2.5 percent this year, compared to 2 percent for advanced economies overall.
So the Bank of England is expected to eventually follow the Fed and raise rates. But it's not in any hurry. The British central bank last week chose to keep interest rates at a record low 0.5 percent, the sixth calendar year in a row without a change.
Inflation is running at minus 0.1 percent, so there's little pressure for the Bank of England to move. Indeed, the bank suggested in its quarterly inflation report last month that a hike might be a year away.
RESERVE BANK OF AUSTRALIA
Australia's economy has been rattled by the slowdown in China, which for years devoured Australian iron ore and other raw materials. The IMF expects Australian economic growth to slow to 2.4 percent this year from 2.7 percent in 2014.
"In such circumstances, monetary policy needs to be accommodative," Glenn Stevens, the Reserve Bank of Australia governor, said on Dec. 1. So the Australian central bank decided that day to keep its benchmark rate unchanged at 2 percent, where it's been since a rate cut in April.
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Updated Date: Dec 17, 2015 03:06:41 IST