The Bank of Japan Friday held fire on expanding its massive stimulus programme despite more weak data as the world's number three economy teeters on the edge of recession.
In a short statement following a closely watched meeting, the BoJ said it would hold steady on its record 80 trillion yen ($665 billion) annual asset-buying scheme.
The central bank also releases its semi-annual inflation and growth projections later in the day, with speculation mounting that it will roll back its outlook as weakness overseas, particularly in China, hurt Japan's prospects.
Japan posted weak inflation and household spending figures earlier Friday that had pointed to the BoJ possibly unleashing another wave of stimulus to counter the downturn.
Friday's policy meeting came a year after the bank shocked markets by expanding the programme, which was launched in April 2013 in a bid to stoke growth and ramp up inflation to 2.0 percent in two years.
BoJ monetary easing is a cornerstone of Prime Minister Shinzo Abe's growth blitz, dubbed "Abenomics", which has faltered after intially setting off a stock market rally and weakening the yen, giving a lift to corporate profits.
After the announcement the dollar fell to 120.63 yen from 121.10 yen in New York Thursday, while the euro dipped to 132.46 yen from 132.96 yen.
Tokyo's benchmark Nikkei 225 stock index fell further in the minutes after the announcement, but quickly bounced back into positive territory, sitting 0.33 percent higher in the afternoon.
Japan has suffered as exports to key trading partner China slumped, with the weak inflation and consumer spending at home also slamming the brakes on growth.
The economy contracted in the second quarter and it is on track for another decline in the three months to September.
Abe has struggled in his efforts to cut red tape and shake up the regulated economy, with the wider impact of his programme being limited.
- 'Shaky ground' -
On Friday, government data showed consumer prices contracted 0.1 percent in September from a year ago, dealing another blow to Tokyo's efforts to slay years of deflation.
The fall in core inflation, which excludes volatile fresh food prices, came after the world's third largest economy in August suffered the first price decline since 2013.
Weak domestic demand and plunging energy prices have all but wiped out an initial boost supplied by the BoJ stimulus.
Household spending also fell last month, in a sign that efforts to turn around Japan's so-called "deflationary mindset" were struggling.
While falling or stagnant prices may seem like a good thing for consumers, they tend to put people off buying goods and that, in turn, hurts firms which roll back their new investment and hiring.
"The BoJ's monetary accommodation over the past two and a half years has had only a limited impact on Japan's growth and inflation," said Kiichi Murashima, chief economist at Citigroup in Japan.
"Policymakers had expected a much larger impact on the economy."
"And the deterioration in the global economic outlook, including developments in China, will likely make Japanese companies more cautious about expanding business investment and raising wages," he added.
A sales tax rise last year -- aimed at taming Japan's huge national debt -- also hammered consumer spending, denting demand for products made by firms that are also facing slowing growth overseas.
Ratings agency Standard & Poor's cut its sovereign credit rating on Japan last month, saying Tokyo has little chance of reinvigorating the moribund economy in the short-term, with social welfare costs spiralling.
On Thursday, separate data showed Japan's factory output unexpectedly rebounded last month, tempering expectations for BoJ easing.
Friday's data also included relatively strong figures that showed Japan's labour market remained tight.