According to BOJ board member Yukitoshi Funo, rising external risks on account of the prolonged US-China trade war and weakness in the global economy could push Japan’s central bank towards stepping in with protectionist action. Funo made these comments while addressing business leaders in Matsue, adding that the momentum to maintain price stability could be lost as a result of climbing downside risks due to external factors.

In its policy meeting in September, the BOJ had voted to hold its monetary policy steady but had signaled that it would review this decision in the next meeting scheduled to take place in October. Is this a hint that the BOJ could implement more monetary easing in its upcoming meeting this month?

Japan’s export-oriented economy has suffered a double whammy on account of rising trade tensions between the US and China. On the one hand, Japan’s exports have slid lower as China is one of its leading trade partners. On the other, rising uncertainty in financial markets has fueled the safe haven appeal of the Japanese yen and caused it to appreciate, impacting Japan’s trade profits.