The Bank of Japan left monetary policy unchanged on Friday, a month after it raised rates for the first time in six years. As widely expected, the BOJ kept the overnight call rate target at 0.25 percent. The decision by the nine-member board was unanimous.
Earlier, data showed Japan's economy grew slightly less than expected in the three months to June, but analysts maintained the view that a moderate expansion led by domestic demand remained intact, keeping the outlook for a gradual rise in interest rates.
After the BoJ's rate rise in July, BoJ Governor Toshihiko Fukui ruled out the possibility of successive rate increases, and many market participants expect the next rate rise to be in the October-December quarter.
"The Bank of Japan won't be in a hurry to raise interest rates," said Masaaki Kanno, chief economist at J.P. Morgan in Tokyo. "It will probably take its time to examine monthly economic data until it compiles is next semi-annual outlook report in October."
Markets will be watching for clues about the rate outlook when Fukui holds a news conference later on Friday. Economics Minister Kaoru Yosano suggested the BoJ would take some time before its next move. "When the Bank of Japan ended its zero rate policy it said future rate rises would be made in a gradual manner while looking at market conditions.