Japan's central bank kept its powder dry at its March policy review on Tuesday, with economists only expecting further stimulus in July as the central bank waits to assess the impact of its uncharted entry into negative interest rates.
After a two-day monetary policy meeting that began on Monday, the Bank of Japan (BOJ) maintained its commitment to raise the monetary base by 80 trillion yen annually and left the rate it charges commercial banks on certain reserves at 0.1 percent.
If needed, additional easing steps will be taken to hit 2 percent inflation, the BOJ said, adding that it will review the ratio of reserves for which negative interest rates are applied every three months.
Money reserve funds (MRFs) will be excluded from the negative rate, the BOJ said. Instead, a zero rate will be applied to MRFs.
Before Tuesday's market open, the Nikkei business daily reported that the central bank was looking to downgrade its assessment of a moderate economic recovery. At Tuesday's meeting, the BOJ said the economy remained in a gradual recovery, attributing recent weakness in exports and output due to a slowdown in emerging markets.
The central bank also said it will monitor the impact of recent financial market ructions on business confidence, warning it could delay a transition from Japan's decades-old deflationary mindset.