In dilute magnetic oxide hexagonal Ba(Ti0.9Fe0.1)O2.81 bulk ceramic, we report on combined ferromagnetism and improper ferroelectricity as well as cross-controlled magnetoelectric effects at room temperature. The annular-bright-field (ABF) imaging technique in scanning transmission electron microscopy (STEM) demonstrates an oxygen vacancy ordering in the hexagonal closest-packed Ba1-O1 layers and severe distortion of the octahedra and pyramids. Strong dependencies of the susceptibility on temperature and magnetic field as well as the frequency dependence of magnetization under an ac electric field reveal that the intrinsic ferromagnetism of the highly insulating system dynamically evolves from a paramagnetic ground state, and dynamic exchanges of trapped electrons in the ordered polarons are attributed to the ferromagnetic interaction. Accordingly, aided by the motion of oxygen vacancies, responses of the trapped electrons to the ac magnetic field result in the reversal of magnetically induced voltages between high and low states. Our results not only expand our understanding on the magnetoelectric coupling mechanism, but also provide a grand opportunity toward designing novel multiferroic materials through introducing ordered point defects into a centrosymmetric matrix.

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