The Bank of Japan maintained its ultra-loose monetary policy today and downgraded its view on inflation in a fresh blow to its long-held 2% price goal.
This further complicated the central bank's path to rolling back its crisis-era stimulus.
As widely expected, the Bank of Japan kept its short-term interest rate target at -0.1% and a pledge to guide 10-year government bond yields around 0%.
The move contrasts with the European Central Bank's decision to end its asset-purchase programme this year and the US Federal Reserve's steady rate increases, which signalled a break from policies deployed to battle the 2007-2009 financial crisis.
"Consumer price growth is in a range of 0.5-1%," the Bank of Japan said in a statement accompanying the decision.
That was a slightly bleaker view than in the previous meeting in April, when the bank said inflation was moving around 1%.
The Bank of Japan stuck to its view the economy was expanding moderately, unfazed by a first-quarter contraction that many analysts blame on temporary factors like bad weather.
But it also maintained its cautious assessment on prospects for hitting its elusive 2% inflation target, saying that inflation expectations were moving sideways.
The central bank said it will continue buy bonds so that the balance of its holdings increases at an annual pace of 80 trillion yen.
The delay in pulling out of crisis-era stimulus would leave the Bank of Japan with a lack of ammunition to fight another economic downturn, even as its US and European peers start restocking their tool-kit.