The Bank of Japan held off fresh easing measures on Thursday and repeated its view that the economy was “picking up moderately” but warned Europe’s ongoing debt crisis continued to cast a shadow. After a two-day policy meeting, the central bank said it left unchanged its policy tool, a 70-trillion-yen ($891-billion) asset purchase programme while it would also hold interest rates unchanged at between zero and 0.1 per cent. “Japan’s economy has started picking up moderately as domestic demand remains firm, mainly supported by reconstruction demand” following the March 11 quake-tsunami disaster, it added. The nation’s economy was hammered by last year’s terror, which wreaked havoc on industrial production, while flooding in Thailand and the yen’s surge to record highs against the dollar later in the year also hurt growth. On Thursday, the BoJ said “overseas economies have shown moderate improvement” but added that “in global financial markets some nervousness continues to be seen, mainly due to concern about the European debt problem”. Europe is a major market for Japanese products and Tokyo warned that the Eurozone’s fiscal crisis was the biggest threat to recovery. The BoJ’s decision on Thursday was largely in line with market expectations, and came after the US Federal Reserve and European Central Bank also held off fresh measures following recent policy meetings. “Japan’s economy started improving ahead of others,” Yuji Kameoka, chief currency strategist at Daiwa Securities, told Dow Jones Newswires, adding that the BoJ would likely take a “wait-and-see stance” on fresh measures. “Emerging economies like China aren’t bad. There are also signs of improvement in the US economic indicators recently. The exception is Europe.” The yen got a boost following the BoJ’s decision, with the euro buying 96.99 yen and the dollar at 78.36 yen, compared with 97.22 yen and 78.52 yen earlier. “If the Fed takes additional easing and that pushes the dollar down against the yen and increase Japan’s deflationary pressure, the BoJ may be forced to do something new,” said Barclays Securities Japan chief economist Kyohei Morita. Japan has been stuck in a deflationary spiral for years with efforts to battle a general trend of falling prices having little impact. Last month, the BoJ said it expected Japan’s economy to expand 2.2 per cent in the fiscal year through March 2013, slightly lower than its April outlook of 2.3 per cent but still above a January forecast of 2.0 per cent. It kept a 1.7 per cent growth forecast for the next fiscal year unchanged. While the bank made no major policy moves after its July meeting, it said it would tweak policy by reducing the amount of fixed-rate loans it offers by five trillion yen while it increased the purchase of treasury discount bills by the same amount.