The Bank of Japan (BOJ) has left its benchmark interest rate unchanged while scaling down its economic outlook, citing a global slowdown and a stronger yen.
The BOJ policy board voted unanimously to hold its overnight target rate at 0 to 0.1% after indicating earlier this year that rates would remain steady for some time to come.
Japan's Nikkei Average ended down 0.9% at 8,463.16 today while the broader Topix closed with 0.9% loss at 724.11.
The yen was little changed at 77.04 versus the dollar.
“Japan’s economic activity has continued picking up, but at a more moderate pace,” the BOJ said in a statement.
Exports were increasing, though at moderating pace, as inventories of Japanese goods were rebuilt after disruption to industry in the aftermath of the devastating earthquake and tsunami in March of this year, the Japanese central bank said.
Inflation is almost non existent, with annual gains in consumer prices trending around 0%, when stripping out volatile fresh-food prices, the BOJ said.
“Japan’s economy will face an adverse effect from the slowdown in overseas economies and the appreciation of the yen, as well as from the flooding in Thailand. After that, the economy is expected to return to a moderate recovery path,” the BOJ said.