In a Nikkei interview, BoJ Governor Harukiho Kuroda maintained his optimistic view on the economy. He noted that “we’re maintaining momentum toward the price stability target” of 2% inflation”. Also, “domestic demand — consumer spending and capital investment — are relatively firm.” However, “caution is needed” due to overseas uncertainties, in particular with trade war. Cutting interest rates “further into the negative zone is always an option” if more monetary stimulus is needed.

BoJ has laid out the four policy options in case of a downturn. Those include cutting the short-term policy rate, lowering its target for long-term rates, stepping up asset purchases and accelerating expansion of the monetary base. Kuroda said “we’re considering a variety of possibilities, including combinations of these and improved versions.”

Released from Japan, overall household spending rose 0.8% yoy in July, below expectation of 0.9% yoy. Labor cash earnings dropped -0.3% yoy, below expectation of 0.1% yoy. Leading indicator rose 0.3 to 93.6, above expectation of 93.2.

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