The Bank of Japan has left interest rates on hold and cut its forecast for growth amid concerns about rising costs and signs of an economic slowdown.
The central bank voted to keep the benchmark rate at 0.5% - the same level it has been at since February 2007.
At the same time it lowered its economic growth forecast for the year to March 2009 to 1.2% from 1.5%, compared with 1.7% in April.
Soaring gas and food prices and rising material costs are weighing on the world's second-largest economy.
