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Major central banks are taking their first halting steps toward reducing the emergency high-octane fuel they have been pumping into the world's sputtering economies.

But even as they begin the laborious process of pulling back on the amount of the excess cash they flooded into the financial system to prevent the worst collapse in decades from turning into another Great Depression, they aren't about to slam on the monetary brakes and risk driving a fragile recovery off the rails.

The European Central Bank and Bank of England yesterday joined the U.S. Federal Reserve, Bank of Canada and Bank of Japan in leaving interest rates at historic lows.

ECB President Jean-Claude Trichet told reporters in Frankfurt that euro zone countries face “stronger than anticipated risks, though confidence may improve.”

But the ECB said the one-year loans available to commercial banks as part of an emergency relief package will be withdrawn from the market, a move that could come as early as next month.

“Not all our liquidity measures will be needed to the same extent as in the past,” ECB President Jean-Claude Trichet said after the bank announced it was holding its benchmark interest rate at 1 per cent.

Policy makers are trying to strike an incredibly delicate balance between the need to nuture an economic recovery most describe as fragile, while at the same time keep from inflating bubbles in housing, equity and other asset markets. For now, central bankers such as Mr. Trichet appear willing to err on the side of stimulating economic growth, although more policy makers now acknowledge they should be ready to try to deflate asset-price bubbles given what they learned from the financial crisis.

“It's definitely the beginning of an exit for them [ECB], but that doesn't mean they'll be tightening any time soon,” said Benjamin Reitzes, an economist with BMO Capital Markets. “Just because you withdraw emergency measures doesn't mean you're going to start raising rates.”

The Bank of Canada also is paring many of its emergency lending programs, eliminating or reducing the cash auctions it established a year ago when financial institutions struggled to find private sources of money.

Governor Mark Carney's central bank continued on that path yesterday, saying that as of February, banks that settle their overnight accounts through the Bank of Canada will have to resume doing so with higher grade collateral.

In October 2008, the central bank said it would temporarily accept riskier collateral, such as asset-backed commercial paper, for overnight loans. On Feb. 2, the central bank of will begin reducing the amount of riskier assets it will accept as collateral to 20 per cent of the total pledge by April from the current 100 per cent.

Meanwhile, the Bank of England, which kept its own key rate at a record low 0.5 per cent, announced that it will commit an additional £25-billion to buy assets from commercial banks, boosting the size of its aggressive quantitative easing program to £200-billion.

But the latest increase is smaller than the sums the British central bank had made available in the previous three months.

“Essentially, they're removing themselves from the market, but at a gradual pace,” Mr. Reitzes said. “They don't want to just stop buying [assets] all at once.”

The Fed has taken a similar tack, extending its purchases of agency debt and mortgage-backed securities to the end of the first quarter of 2010 and gradually reducing the weekly amounts so it can slowly ease the market off the government crutch.