Mar 15, 11:42 PM EDT

Japan's central bank holds steady on interest rate, stimulus

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TOKYO (AP) -- Japan's central bank opted Thursday to keep its monetary policy steady, as the U.S. Federal Reserve tightens and European Central Bank edges in that direction.

The Bank of Japan ended a policy meeting by keeping the minus 0.1 percent benchmark interest rate unchanged while working toward a 2 percent inflation rate target.

The outcome was as expected. By midday, Japan's Nikkei 225 stock index was flat, at 19,578.06.

The central bank is buying about 80 trillion yen ($700 billion) a year of Japanese government bonds to inject more cash into the economy. Interest rates are near zero, the aim is to use expectations of inflation to stimulate more spending and borrowing by businesses and consumers.

The BOJ said in a statement that the economy, which grew at a 1 percent annual pace in 2016, was still on a "moderate recovery trend."

The Federal Reserve raised the federal funds rate 0.25 percentage points to a range of 0.75 to 1 percent on Wednesday in a show of confidence in the economy. It signaled the likelihood of additional rate hikes later this year.

The 19-nation eurozone has been much more tentative about "tapering" let alone tightening policy. In December, the European Central Bank decided to continue bond purchases through the end of 2017 while reducing them from 80 billion euros ($84 billion) a month to 60 billion euros a month beginning in April.

Last week, the ECB decided not to change the size or duration of its stimulus programs, judging a rise in annual inflation to near its own 2 percent target to reflect increased oil prices rather than other more expansionary factors, such as higher wages for workers.

While many indicators show the U.S. economy picking up steam, conditions in slower-growing Europe and Japan remain iffy.

The BOJ cited the impact of the Fed's moves and other developments in the U.S. as risks.

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