Japan's central bank gave an upbeat assessment of the world's number three economy on Thursday, but it flagged risks including "developments" in the US and Chinese economies, as well as Britain's exit from the European Union.
The Bank of Japan held fire on fresh policy measures, as expected, following its latest meeting, a day after the US Federal Reserve hiked interest rates and underscored its confidence in the world's top economy.
BoJ policymakers pointed to a "steady recovery" in the economy, even as efforts to boost inflation remain well short of its two-percent target.
It has not made a significant move for the past four policy meetings.
"The central bank has little reason to do more now -- the economy is perking up, with a tight labour market stoking inflationary pressures and core consumer prices rising again," said Bloomberg Intelligence economist Yuki Masujima.
Policymakers repeated previous concerns about developments overseas, worried about how US President Donald Trump's protectionist leanings will affect Japan's trade picture.
"Risks to the outlook include the following: developments in the US economy and the impact of its monetary policy on global financial markets," the BoJ said.
It also cited edginess about China's economy, which last year grew at its slowest pace in a quarter of a century, while Britain's exit from the EU could have implications for the huge trading bloc.
Later, bank chief Haruhiko Kuroda said the bank's monetary easing plan would remain in place for the time being -- dashing hopes that he might give clues about a timeline for pulling back on its huge asset-buying programme.
- Weak pay hikes -
"Since we're still far off the two-percent price target, it's appropriate to press on with powerful monetary easing," he told a press conference.
"The world economy has been on a solid recovery trend since late last year... but we think the downside risks for (Japan's) economy and prices still outweigh the upside."
On Thursday, the BoJ left its massive 80 trillion yen ($705 billion) annual asset-purchase scheme unchanged and said it would press on with a plan to keep the yield on government 10-year bonds around zero.
It also made no change to a negative interest rate policy, designed to spur lending.
The measures are central to a broader bid to stimulate growth in Japan's economy.
The US Fed's rate hike on Wednesday is a potential plus as it highlights strength in a major market for Japanese products.
Rate rises also tend to boost the dollar against the yen, which is good news for the profitability of Japanese firms doing business abroad.
But some of Japan's top companies on Wednesday announced their lowest wage increases in four years, laying out another challenge to the central bank and Prime Minister Shinzo Abe's economic recovery scheme, dubbed Abenomics.
Abe has been calling for big wage hikes so workers have more money to spend.
His growth plan -- a mix of aggressive monetary easing and huge government spending along with reforms to the economy -- was unveiled in early 2013.
It stoked a stock market rally and fattened corporate profits, but the long-term effect on the economy has been less dramatic.
While Japan's job market is tight, individual spending -- which accounts for more than half of the country's economic output -- remains in the deep freeze.
The BoJ expects to reach its inflation goals by March 2019 -- four years later than planned.