By The Associated PressMajor central banks around the world have been pursuing low-interest rate policies to try to stimulate growth and reduce high unemployment. The latest development came Tuesday with the Bank of Japan's announcement that it was setting an inflation target of 2 percent â¿¿ twice the current target. It was a signal that the Bank of Japan is ready to accept the risk of higher inflation in exchange for combating a prolonged bout of deflation. Deflation is a destabilizing drop in income, the prices of goods and services and the value of stocks, homes and other assets. The Bank of Japan had not been meeting its lower inflation target of 1 percent. Price increases had hovered below 0.5 percent for the past two years. Among the recent steps central banks have taken to try to bolster their banking systems and economies: â¿¿ BANK OF JAPAN Interest rates: Has kept its benchmark interest rate at zero to 0.1 percent. Bond buying: Announced Tuesday that it will maintain its current level of bond buying and that starting in January 2014 it will expand the program to buy about 13 trillion yen ($145 billion) a month in Japanese government bonds and other assets. â¿¿ FEDERAL RESERVE Interest rates: Has kept its benchmark short-term rate at a record low near zero since December 2008. Last month, it said it planned to keep its short-term rate at that level until unemployment drops below 6.5 percent â¿¿ as long as inflation expectations remain below 2.5 percent. (Unemployment is now 7.8 percent.) It marked the first time the Fed had linked a future rate move to a specific unemployment rate. Bond buying: It said in December that it will spend $85 billion a month to buy Treasurys and mortgage-backed securities until the job market improves substantially.
â¿¿ EUROPEAN CENTRAL BANKInterest rates: Has kept its benchmark rate at 0.75 percent, a record low. Bond buying: Unveiled in September a plan to buy unlimited amounts of government bonds to help lower borrowing costs for countries struggling to manage their debts. Earlier, the ECB gave banks more than euro 1 trillion ($1.3 trillion) in low-interest loans lasting up to three years. The loans provide secure financing at a time when some banks can't borrow normally. â¿¿ BANK OF ENGLAND Interest rate: Has kept its benchmark rate at a record low of 0.5 percent since 2009. Bond buying: Announced last summer a plan to buy more government bonds from financial institutions. The goal is for the banks to use the extra cash to lend to businesses and households.