Japan's central bank has kept its key interest rate unchanged at 0.1%, as expected, aiming to continue nurturing a moderate recovery while also fighting deflation.
'Japan's economy shows further signs of a moderate recovery, induced by improvement in overseas economic conditions,' the Bank of Japan statement said.
The decision to leave the key rate unchanged comes amid worries about the impact of the yen's recent strength on Japan's fragile export-driven recovery, which has driven speculation as to how the bank may respond.
Earlier in the day, Finance Minister Yoshihiko Noda told reporters he wanted the bank to co-operate more with the government to tackle the rising yen, in a sign of fresh pressure on the body from officials.
Japan has not intervened in currency markets since 2004. For every one-yen rise in the currency's value against the dollar, companies can lose tens of billions of yen earned overseas when repatriated.
The central bank has maintained its current overnight call rate, at which it charges other banks overnight, since December 2008, the height of the global financial meltdown.
