BOJ Kuroda says room for more easing, including new ideas

Led by such defensive stocks as utility companies and retailers, the Nikkei ended 0.7 per cent higher at 17,037.63, the highest closing level since May 31.

“There is ample room for further monetary easing in either of three dimensions – quantity, quality, and the interest rate – and other new ideas should not be off the table”, Kuroda said in remarks prepared for delivery at the conference.

U.S. stock futures edged up 0.2 per cent, though USA stock and bond markets will be closed on Monday for the Labor Day holiday.

But it was still a solid number, and analysts were split on whether it was enough for the Federal Reserve to hike interest rates this month.

Meanwhile G20 leaders and top policymakers are meeting in Hangzhou, China. Chinese President Xi Jinping said at the open of the summit on Sunday that global economy is being threatened by rising protectionism and risks from highly leveraged financial markets. From Zurich, UBS’s head of currency strategy Constantin Bolz said the factors that had driven the dollar higher against the yen – namely growing expectations of a Fed hike in September and bets on imminent further BOJ easing – had faded somewhat, but that a fall-back was not surprising given the rapidity of the move. “The central bank should always prepare policy options to address such situations”, Kuroda said. “The Bank has a broad range of policy options. we should not hesitate to go ahead with it as long as it is necessary for Japan’s economy”.

After slashing interest rates to minus 0.1 per cent earlier this year, the BoJ has routinely underwhelmed, with the yen continuing to strengthen against the dollar.

Kuroda said the “comprehensive assessment” of the BOJ’s monetary policy at its next policy meeting on September 20-21 “will not be a discussion on winding down the easing measures”, hinting at the possibility of further loosening.

Ohta said that investors would continue to study Japan monetary policy headlines and US economic indicators – the key factors setting market direction for now.

He also acknowledged the downside of the bank’s negative rate policy, a plan created to spur lending but which has hurt commercial banks’ profits. All 33 economists polled by Reuters expected a steady outcome, with financial markets pricing in the smallest of chances for a cut.

Brent crude was down 0.1 per cent at US$46.79 a barrel, while U.S. crude slipped 0.2 per cent to US$44.35.

Both had gained 3% in the previous session as the dollar slipped after the employment data, making oil cheaper for investors holding other currencies.

But for the week, Brent fell 6 per cent, its biggest drop in five weeks, while U.S. crude fell almost 7 per cent to mark its largest decline in eight weeks.