The Bank of Japan has kept monetary policy steady and stuck to its optimistic view of the economy. That comes  even as renewed yen rises and slumping stock prices threaten to hurt business sentiment and derail a fragile economic recovery.

But the central bank offered a slightly weaker view on the outlook for consumer inflation than in April, saying that year-on-year change in the consumer price index is likely to be slightly negative or about zero percent for the time being.

The central bank also maintained its pledge to increase base money, or cash and deposits in circulation, at an annual pace of 80 trillion yen. BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 p.m local time, or 6:30 GMT to explain the policy decision.