The Bank of Japan (BOJ) maintained its monetary policy stance, as widely expected, but acknowledged that the recent drop in demand after tax increases had led to "some weakness particularly on the production side."
But Japan's central bank, which launched an aggressive phase of monetary easing in April 2013,
said the country's economy was expected to continue its moderate recovery as the impact of the decline in demand following the tax hike on April 1 this year was expected to wane gradually.
The BOJ aims to boost the country's monetary base by an annual pace of about 60-70 trillion yen by buying Japanese government bonds, exchange-traded funds, real estate investment trusts, commercial paper and corporate bonds.
The BOJ also repeated its guidance that it would continue with its quantitative and qualitative monetary easing (QQE) for as long as it is necessary to reach and maintain its price stability target of 2 percent, making adjustments as appropriate.
Japan's headline inflation rate eased to 3.3 percent in August from 3.4 percent, continuing its decline after prices jumped following the consumption tax hike. In April inflation rose to 3.4 percent form 1.6 percent in March and hit a 2014-high of 3.7 percent in May.