Minutes of BOJ’s monetary policy meeting held in October reveal that policymakers raised concerns about the prolonged easing and the possible impact of ultra-low interest rates. Board members of Japan’s central bank also stressed on the need for the BOJ to work with the government towards preventing an economic downturn in the face of rising external risks.

More board members are highlighting the need for greater focus on fiscal policy towards protecting Japan’s economy from heightened risks of ongoing trade tensions and slowdown in the global economy. The impact of prolonged monetary easing, a strategy the BOJ has adopted to offset weakness in inflation, is waning and it’s time for alternative ways to boost economic growth.

In its October meeting, the BOJ had elected to hold its monetary policy steady but had hinted at the possibility of further easing in case growing external risks prevented economic recovery. However, the Bank of Japan has maintained an ultra-loose monetary policy for several years in bid to lift inflation closer to the 2% target, and the prolonged easing has failed to make much of a change so far.

According to some board members, “While financial institutions’ soundness was ensured for the moment, the cumulative side effects of prolonged low interest rates warranted vigilance.”