Recent moves by central banks, at a glance

AP News
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Posted: Jan 22, 2015 3:09 PM

It's been an action-packed couple of weeks for some of the world's central banks.

On Thursday, the European Central Bank unveiled its latest plan to support Europe's stagnating economy: It pledged to start spending 60 billion euros on government and private bonds every month. The news helped lift stock prices and drove the value of the euro to new lows.

The ECB's announcement followed surprise moves by the Swiss National Bank last week and the Bank of Canada on Wednesday.

Here are steps that major central banks around the world have taken recently to try to support their economies:

— EUROPEAN CENTRAL BANK

Interest rates: The European Central Bank kept its benchmark rate unchanged at 0.05 percent Thursday.

Other policies: Later in the day, the ECB launched its most aggressive effort to date to revive the region's ailing economy — a 19-month program to buy 1.1 trillion euros in government and private bonds starting in March. It acted after months of excessively low inflation in the eurozone that has discouraged borrowing and spending and kept the economy at risk of recession. By pumping new money into the eurozone's banking system, the ECB's bond purchases should make loans cheaper and easier to get so companies can invest, expand and hire. The size of the program exceeded investors' expectations, and the value of the euro fell on anticipation that the new money from the ECB would drive down the currency's value.

—DENMARK CENTRAL BANK

Interest rates: Shortly after the ECB's announcement, Denmark's central bank announced its second rate cut in three days to try to discourage euro-fleeing investors from buying its currency, the krone. It lowered its deposit rate further into negative territory to minus 0.35 percent from minus 0.2 percent. On Monday, it had lowered the rate to minus 0.2 percent from minus .05 percent. Because Denmark pegs its currency to the euro, Danish officials have had to respond when the ECB's actions threaten to destabilize that peg.

Other policies: The Danish central bank has intervened in currency markets in recent months to try to control the value of the krone.

— SWISS NATIONAL BANK

Interest rates: Switzerland sent financial markets into turmoil last week when it slashed rates and abandoned efforts to cap the franc's value against the euro. It cut the rate on commercial bank deposits to a shockingly low minus 0.75 percent in order to ward off investors from the Swiss franc.

Other policies: Since 2011, the Swiss National Bank has had a program to keep its franc from appreciating too much against other currencies — most importantly the euro. The bank had set a limit of 1.20 francs to the euro to keep its rise in check. But it became untenable for the SNB to keep up its program as the euro weakened. So the SNB decided on Jan. 15 to allow the market to re-price the franc. In doing so, it triggered a massive re-pricing that drove the currency to gain more than 20 percent against the euro.

— FEDERAL RESERVE

Interest rates: In contrast to their counterparts in other big economies of the world, the Federal Reserve is moving closer to raising rates from record lows. But it will be "patient" in deciding when to do so, the central bank said after its last meeting in December. Fed Chair Janet Yellen said the strength of U.S. economic data and the level of inflation, not a calendar date, will dictate when it raises rates. The Federal Open Market Committee meets next week.

— BANK OF CANADA

Interest rates: Canada's central bank surprised investors this week when it cut its key interest rate to 0.75 percent from 1 percent. Many economists had been expecting the Bank of Canada to keep rates steady until later this year or early 2016. The central bank said Wednesday's decision was driven by the "recent sharp drop in oil prices, which will be negative for growth and underlying inflation in Canada."

— CENTRAL BANK OF BRAZIL

Interest rates: Brazil's central bank on Wednesday hiked its benchmark interest to 12.25 percent to control high inflation. The central bank's inflation target is 4.5 percent, with an upper limit of 6.5 percent. But consumer prices over the past year have been stuck above that ceiling.

— PEOPLE'S BANK OF CHINA

Interest rates: Chinese authorities have been cautious in tweaking monetary policy. The People's Bank of China lowered its benchmark rates in November for the first time in more than two years. The bank cut the rate on a one-year loan by commercial banks by 0.4 percentage point to 5.6 percent. The rate paid on a one-year savings was lowered by 0.25 point to 2.75 percent.

But the People's Bank of China may be pressured to do more as the world's Nov. 2 economy decelerates. Data released Tuesday showed that the Chinese economy grew 7.4 percent in 2014, its weakest performance in nearly a quarter-century. And its growth is forecast to slow even more over the next two years. Though China continues to grow at more than twice the pace of the overall world, its growth rate marks a sharp drop from the sizzling double-digit expansion of previous years.