All reserve banks news

• QE still has considerable headroom

• QE limits are specific to contingencies faced by the ECB

• If outlook doesn't improve, additional stimulus is needed

• Negative rates have proven to be a very important tool

• Indicators for the coming quarters point to lingering softness

• ECB able to enhance forward guidance by adjusting its bias and conditionality to account for variations in adjustment path of inflation

• In the coming weeks, we will deliberate how our instruments can be adapted commensurate to the severity of the risk to price stability

Dovish comments from Draghi sent euro to its low for the day with EUR/USD testing the 1.1200 handle currently.

Bank of Japan Governor Haruhiko Kuroda said the central bank will "certainly" debate heightening overseas risks at a rate review this week, underscoring concerns among policymakers about the economic fallout of a U.S.-China trade war.

"As for recent overseas economic developments, there are strong downside risks regarding the Sino-U.S. trade friction and China's economy," Kuroda told parliament.

"We'll certainly debate such overseas developments" at the upcoming rate review, he said, but added that the BOJ is already keeping monetary policy ultra-loose.

"The BOJ will guide monetary policy appropriately taking into account the impact overseas economic changes could have on Japan's economic outlook and the momentum for achieving our inflation target," Kuroda said.

• Warns of bleak indications about the health of the global economy

• Central banks should never ignore market signals

• But also shouldn't follow them blindly either

• Markets are sending a "quite alarming" message at odds with benign data

• Capacity for policymakers to deal with shocks today is less than it was previously

Bank of Japan Governor Haruhiko Kuroda said the central bank can deliver more monetary stimulus if necessary.

The BOJ will ease further if the momentum towards its 2% inflation target is lost, Kuroda said in Fukuoka, Japan, where central bankers and finance chiefs from the Group of 20 met over the weekend.

Kuroda, however, said the BOJ did not need to act now, citing the health of the economy.

Asked if the BOJ still had the capacity to do "something big," Kuroda said: "I think so."

The options would be cutting the -0.1% negative rate further, lowering the target for 10-year yields, increasing the monetary base, or boosting asset purchases, he was quoted as saying.

• Economic forecasts had assumed rates at 1% by year-end

• The board has not yet made a decision, much depends on labour market

• Rate decision was not in response to deterioration in outlook since May

• Rate cut is to lead lower AUD than otherwise would have been the case

• Easing aimed at spurring jobs growth, lifting inflation

• One option is for fiscal support, including spending on infrastructure

• Banks should fully pass through rate cut through mortgage rates

• Well aware that savers will be disappointed by rate cut

The ECB will discuss options to give more support to the euro zone economy and lay out the details for another set of TLTRO lending operations at its meeting next week, ECB policymaker Olli Rehn said.

Rehn said that the ECB is ready to "adjust and use" all its policy instruments if required adding that the timing of any ECB interest rate rise had slipped back.

"Our central scenario is not a recession. We have a soft patch in the economy," Rehn said, adding that the ECB would wait for the next economic forecasts before debating how to adjust its policies.

Rehn said an ample degree of policy stimulus remained appropriate at present.

Low interest rates are justified by the euro zone's current economic conditions and their impact on banks' profitability should not be exaggerated, ECB policymaker Francois Villeroy de Galhau said.

The European Central Bank has said it is considering the need to mitigate the impact of its negative deposit rate on lenders' profits.

"Maintaining a low interest rate environment is completely justified and necessary in light of the economic situation in the euro area. The issue of low rates' impact on banks should neither be ignored nor blown out of proportion," Villeroy said.

"It would be an exaggeration ... to say this is the only reason profits are under pressure: monetary policy also has favourable effects for banks, including a reduction of the cost of risk and an increase in lending volumes," Villeroy said.

Other than low rates, banks - as well as insurers - were facing an "existential challenge" in the form of transforming their businesses to interact with clients digitally while investment banks were losing market share to U.S. rivals due to a lack of critical mass, added Villeroy.

• Domestic economy has entered into a delicate state

• Q1 GDP appears strong but driven by fall in imports, inventories

• Hard to say that economy is recovering

• Japan's fiscal stimulus is improving under QQE

• MMT is questionable as unlimited debt issuance would cause unwelcome inflation

• Central bank could extend forward guidance if it needed to ease more

• BOJ could strengthen forward guidance by committing to keep ultra-easing policy for longer than expected

• Cutting rates, increasing asset purchases or pace of money printing also among steps if BOJ were to ease more

• Rate cut may help to maintain inflation goal credibility

• 2019 inflation may fall short of target

• Fed needs to tread carefully to sustain US expansion

• Any adjustment in policy would be in response to incoming data

• Current trade disputes could become entrenched

• That could alter global trade patterns over the medium-term

• China selling US Treasuries not as big a threat as it is made out to be

• Flat US yield curve is a little bit worrisome

• Hopes that yield curve will steepen somewhat from here

• Chances of global or US recession is 'no higher than it ever was'

• Fed is close to achieving its goals

• Need to keep focus on price stability, employment

• US economy is in good shape

• Economy has rebounded pretty solidly after soft patch at the end of last year

• Sees mixed messages in Q1 GDP data

• Economy is well positioned to deal with challenges

• Business confidence in the US has rebounded

• Tariffs have had a small boost to inflation

• Larger tariffs will have a bigger impact

Bank of Japan Governor Haruhiko Kuroda said he would consider additional easing without hesitation if consumer prices lost upward momentum.

Kuroda, speaking in parliament, said the BOJ was committed to keeping short- and long-term rates low until at least the spring of 2020, adding rates could remain low beyond that period.

Kuroda also said the BOJ's forward guidance did not mean it would re-evaluate its policy immediately in spring 2020.

• delay in Brexit deadline to October will have a negative impact on investments.

• Investment already feeling the consequences of uncertainty.

• If Brexit deal is struck, there could be quite a strong rebound in investment.

• any BOE rate hikes will be gradual.

• Haven't decided whether to apply to succeed Carney as BoE Governor.

• UK has missed out on 2-3 year of business investment on Brexit

• smooth Brexit transition would probably boost investment

• Brexit deal would help economic outlook

• series of repeated Brexit cliff edges could cause investment to be subdued for a while

• UK real incomes have picked up in past year

• UK neutral rate is a lot lower than in the past

• estimates neutral rate is about 2%

• I would expect interest rates will go a bit higher over time, but it won’t be far of fast