Dhaka, Sept. 19 -- The Bank of Japan on Friday kept its benchmark interest rate steady at 0.5%, a widely expected move as inflation remains above the bank's target but overall economic growth shows only moderate momentum.

The decision came after a two-day policy board meeting. In a statement, the central bank said: "Japan's economy has recovered moderately, although some weakness has been seen in part. Overseas economies have grown moderately on the whole."

The move follows a decision by the U.S. Federal Reserve earlier this week to cut its policy rate by 0.25 percentage points, bringing its short-term rate down to about 4.1%, its first rate cut since December.

Japan has long battled deflationary pressures, but consumer prices have now...