The Bank of Japan kept monetary settings and its upbeat economic view unchanged today in the wake of data showing the economy has slipped into recession.
It preferred to spend more time to gauge the effect of its surprise easing last month.
The bank's governor Haruhiko Kuroda avoided criticising Prime Minister Shinzo Abe's decision to delay a tax increase that the banker had supported as a needed budget-balancing step.
As widely expected, the Bank of Japan voted to continue its purchases of government bonds and risky assets, maintaining its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen ($683 billion).
"Japan's economy continues to recover moderately as a trend, although some weaknesses remain mainly in output," the BOJ said in a statement after its policy meeting. It raised its view on exports to "flat" from weakening.
The meeting came in the wake of data on Monday which showed the world's third-largest economy unexpectedly slipped into recession in the third quarter, as the hit to spending from a sales tax hike in April overwhelmed the impact of massive pump-priming by the bank and the government.
Prime Minister Shinzo Abe said yesterday he would call an early election to seek a fresh mandate for his economic policies, and postponed a second increase in the tax slated for October 2015 to April 2017.
The dismal third-quarter gross domestic product data complicates the efforts of the Bank of Japan, which aimed to preempt risks to the inflation outlook by expanding monetary stimulus last month.
