Japan's central bank pressed ahead with its ultra-loose monetary policy Thursday on the back of an improving economy, as its overseas counterparts start turning off the stimulus taps.
The Bank of Japan held steady after a meeting with its chief giving no clues on when policymakers may pull back on the growth programme, with the world's third biggest economy enjoying its longest expansion in more than a decade.
The bank's widely expected decision came a day after the US central bank said it would start to wind down its crisis-era stimulus and hinted at another rate hike by the end of the year.
Markets are also keeping a close eye on the European Central Bank for clues as to when it will start to take its foot off the stimulus pedal and raise borrowing costs.
But with consumer prices still a long way off the BoJ's two-percent inflation target, governor Haruhiko Kuroda said the bank would leave its huge 80 trillion yen ($712 billion) annual asset-buying plan and negative interest rate policy in place.
"Our country's inflation rate is still far from our target so it's only natural that our monetary easing policies are different," from the US and Europe, Kuroda told reporters at a post-meeting press briefing.
"I see no problem with that," he added.
Economists have grown increasingly sceptical about the BoJ's ability to slay years of on-off deflation, and warned about the possible negative impact of exiting the stimulus scheme.
But Kuroda said the impact would be "nothing extraordinary" once the BoJ eventually starts to wind down its stimulus.
"Inflation remains a long way below its projections, so further reductions in the (BoJ's) forecasts next month are all but guaranteed," Marcel Thieliant at research house Capital Economics said in a commentary.
"Policy tightening remains a long way off," he added.
- Wage hikes -
Earlier Thursday, the bank pointed to Japan's improving prospects, after earlier figures showed the economy grew 0.6 percent in the second quarter -- capping off six straight quarters of gains, the best in over a decade.
The growth has been driven mainly by surging exports including smartphone parts and memory chips, as well as investments linked to the Tokyo 2020 Olympics.
The BoJ raised its growth outlook for the economy at its July meeting.
But it slashed its annual inflation forecast and once again delayed its timetable for hitting its price target to sometime in the year to March 2020, about five years later than planned.
Officials had originally set in 2013 a two-year timeline when unveiling the bank's massive asset buying programme as part of Prime Minister Shinzo Abe's push to kickstart Japan's once-booming economy, dubbed "Abenomics".
Tokyo's years-long effort to kickstart growth -- a blend of massive monetary easing, government spending and red-tape slashing -- stoked a stock market rally, weakened the yen and fattened corporate profits.
But the economy was unable to gain a firm footing until recently. And while Japan's job market is tight, individual spending -- which accounts for more than a half of the country's gross domestic product -- has struggled to pick up.
Cash-rich companies have been reluctant to deliver big wage hikes, despite labour shortages.
"The tighter labour market is not yet providing the hoped-for pick up in wage growth," Thieliant said.