The central bank had earlier said consumption had been ‘resilient’.

The benchmark short-term interest rate, called the uncollateralised overnight call rate, would remain at 0.25 per cent.

The annual rate of consumer price index (CPI)-based inflation excluding food has been in the range of 2.5-3 per cent recently, it said.

"Although the effects of a passthrough to consumer prices of cost increases led by the past rise in import prices have waned," it added.

CPI inflation is expected to rise across 2025 due to factors like the "dissipation of the effects of the government's measures pushing down CPI inflation".

Japan's economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions, the central bank said in a release.

“There remain high uncertainties surrounding Japan's economic activity and prices, including developments in overseas economic activity and prices, developments in commodity prices, and domestic firms' wage- and price-setting behaviour,” it added.

Fibre2Fashion News Desk (DS)