All reserve banks news

The European Central Bank's monetary policy will remain expansionary to sustain demand, while growth- friendly fiscal policies in the eurozone could help speed a return to price stability, ECB Governing Council member Ignazio Visco said.

"Eurozone inflation remains at an excessively low level and the risk of a de-anchoring of medium-long term expectations is appearing," Visco, who is governor of the Bank of Italy, said.

In September, euro zone inflation reached 0.8% year-on-year, its slowest pace since 2016.

The ECB last month announced a package of measures that includes restarting bond purchases at a rate of 20 billion euros (£17.26 billion) a month from November.

• BoJ must pay more attention than before to heightening risks, particular focus in on the output gap

• Economy sustaining momentum for hitting BoJ's price goal

• BoJ can combine, enhance tools which are rate cuts increase in asset buying and acceleration of base money

• Our policy is stimulating economy, but increased scrutiny is needed on cost of prolonged ultra low rate environment

• If Oil prices continue to fall and clearly push down Japan's inflation, that could impact inflation expectations

• No preconception on what policy decision will be made in October

• Investors risk aversion easing somewhat due to progress in US-China trade negotiations

• Excessive fall in super-long yields could hurt consumer sentiment by lowering returns of pension, insurance funds

• Overseas economic slowdown yet to affect Japan's domestic demand

• Structural forces unrelated to monetary policy are likely to keep rates low

• BOE unlikely to be able to cut rates as it did in the previous downturn

• BOE analysis rules out taking rates into negative territory

• Does not believe that a recession is overdue

• Not much room for the UK gilt yields to fall much further, so more QE unlikely to provide much more stimulus.

• BOE firepower is less than before previous recessions.

• If you change BOE 2% inflation target, could create higher perceived risk that it will be changed again in future.

• Helicopter money could put central bank independence at risk.

Calling economic and financial market signals for the economic outlook “mixed,” Minneapolis Federal Reserve Bank President Neel Kashkari signaled that he is likely to support further reductions in U.S. interest rates to support growth.

Trade tensions are making businesses cautious, he said, and the inversion of the U.S. yield curve that this week sent global stocks plummeting “is an indicator that people are nervous.” At the same time, the jobs market is strong, and so is consumer spending.

As Fed policymakers gear up for their September rate-setting meeting, he said, they will be assessing all of the data to make a decision. “I am leaning towards the camp of, ‘yes we need to give more stimulus to the economy, more support, we need to continue the expansion and not allow a recession to hit us,’” he said.

• Global growth headwinds justified last week's rate cut

• Trade uncertainty has amplified, could chill business investment

• Doesn't see the economy heading into a recession

• Continued headwinds from trade, lower policy rates from other central banks could justify lower rates

• Global trade likely to pick up only gradually in the coming quarters

• Will remain weaker than overall economic activity

• US-China trade war has sapped confidence and held back investment

• Downside risks to the outlook for trade have partially materialised in recent months

• The threat of further escalation of trade tensions persists

The Reserve Bank of Australia is ready to ease monetary policy further if needed, Governor Philip Lowe said.

"If demand growth is not sufficient, the Board is prepared to provide additional support by easing monetary policy further," he said.

It is reasonable to expect an extended period of low interest rates, Lowe added. It will be some time before inflation is comfortably back within the target range.

The RBA had reduced its benchmark rate in June and July, by 25 basis points each. This was the first back-to-back rate cut since mid-2012.

The governor said two rate cuts will support demand. Recent tax reductions, higher commodity prices, some stabilization in the housing market, ongoing investment in infrastructure and a lift in resource sector investment will also support the economy, he noted.

The bank expects these factors together with rate cuts to put pressure on the economy's supply capacity and lift inflation in a reasonable timeframe, Lowe said.

• ECB stands ready to adjust all of its instruments as appropriate

• Need to ensure inflation continues to move towards target

• Underlying inflation is expected to increase over the medium term, supported by our monetary policy measures, the ongoing economic expansion and stronger wage growth.

• Economic data, survey information points to somewhat weaker growth in Q2, Q3

• Risks surrounding euro area growth outlook continue to be tilted to the downside

• Monetary policy cannot do everything, cannot repair protectionist damage

• It also cannot replace reforms, fiscal policy

• Monetary policy is guided by central bank mandate, not targeting exchange rate

• ECB is data dependent, not market dependent

• That means not relying too exclusively on market-based inflation expectations

• Will assess economic data at meeting next week

• ECB will act accordingly if and when is needed

• Lower rates to hold AUD lower than otherwise

• spare capacity likely to remain in labour market for "some time"

• lower borrowing costs to free up cash for consumer spending

• Board recognised uneven effect of lower rates on different households

• extent of spare capacity meant rate cut unlikely to lead to risky rise in borrowing

• labour demand being met by rise in participation, rather than fall in unemployment rate

• Board saw prospects of lift in household income, support from tax rebates signs of stabilisation in Sydney, Melbourne housing markets

• funding costs for major Australian banks had reached historic low

• retail data suggested discretionary spending remained soft in Q2

• Board noted significant change in outlook for monetary easing globally, esp US

• risks from trade disputes remained high, inflation subdued in developed world

European Central Bank Vice President Luis de Guindos said that the last monetary decision taken by the central bank was taken unanimously by members of the Council.

"I believe (the decision) was taken unanimously. There was no divergent opinion with relation to the communique of the decision taken in Vilnius two weeks ago," de Guindos said.

At the meet, there had been two main issues, de Guindos said, including the extension of the forward guidance on when the bank would raise interest rates and the cost of the ECB's Longer-Term Refinancing Operation (TLTRO III).

"There was also unanimity in that, if the situation deteriorated because downside risks materialised, we would immediately react," de Guindos said.

• Expects inflation to gradually pick up towards 2% target

• Risks associated with overseas economies are significant

• Need to watch for impact on business, consumer sentiment

• There are various uncertainties surrounding the economy

• Inflation likely to gradually accelerate towards 2%

• But uncertainties do exist on this forecast

• Central bank will continue to take appropriate policy steps

• Japan's financial system is maintaining stability