TOKYO: The Bank of Japan held fire on expanding its already huge stimulus programme Wednesday, despite mounting pressure on policymakers in the face of sluggish growth and stagnant prices.
The decision, after a two-day meeting, follows a string of disappointing data that have raised questions about the effectiveness of Prime Minister Shinzo Abe's drive to kickstart the economy, which contracted in the second quarter of the year.
It also comes a day after the International Monetary Fund lowered its growth forecast this year and next, calling on authorities to work harder to slash a national debt that is more than twice as big as its gross domestic product (GDP).
On Wednesday the BoJ maintained its recent rhetoric on the state of the economy, saying in a statement it "has continued to recover moderately, although exports and production have been affected by the slowdown in emerging economies".
Looking ahead, it repeated: "Japan's economy is expected to continue recovering moderately."
The country's inflation "is likely to be about zero percent for the time being, due to the effects of the decline in energy prices", it added.
The yen firmed slightly against the dollar after the announcement. The greenback bought 119.90 yen, compared with 120.28 yen in New York.
While economists had expected the bank to maintain its 80 trillion yen ($665 billion) annual asset-buying scheme at this meeting, attention is now on a gathering at the end of the month, with speculation it will pull the trigger then.
Abe unveiled a plan in April 2013 to kickstart the economy and bring an end to painful deflation with a vast government spending programme and Bank of Japan asset-buying programme -- or quantitative easing -- dubbed "Abenomics".
While the scheme showed early promise, with stocks surging and growth advancing, a recent run of weak data has raised questions about its effectiveness as consumer prices stagnate and economic growth remains torpid.
Another plank of the scheme -- reforms to cut red tape in the highly regulated economy -- have also stalled and experts say Abe's push to pass a highly unpopular security legislation last month could make them even harder to enact with sagging public support.
The IMF estimated in its semi-annual World Economic Outlook that Japanese growth this year would hit 0.6 percent, followed by 1.0 percent expansion in 2016.
That compares with projections earlier this year for 0.8 percent and 1.2 percent respectively.
Data last week showed spending among Japanese households rebounded in August, offering a glimmer of hope after a string of week figures, but economists warned the world's number three economy was still headed for recession.
Factory production fell unexpectedly for a second month in August, while consumer prices dropped for the first time in more than two years, according to data last month.
BoJ governor Haruhiko Kuroda is scheduled to give a press conference at 3.30pm (0630 GMT).
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