The Bank of Japan has opted to keep its key interest rate unchanged at 0.5% for the sixth month in a row.
Japan is reliant on a strong US economy for exports
The move - favoured by eight out of the board's nine members - had been widely expected in the wake of recent turmoil in financial markets worldwide.
Board member Atsushi Mizuno was the only member who favoured raising rates.
While Japan's economy has been recovering, recent data has implied a slowdown. Analysts had feared a rate rise could hamper further growth.
In its monthly report which came out just after the rates decision, the Bank left its assessment of the economy unchanged, saying it continued to expand moderately - mainly driven by exports.
Meanwhile figures from the Finance Ministry released on Wednesday showed the trade surplus had shrunk - the first drop in nine months - resulting from higher fuel prices that had increased the cost of imports.
The country last raised rates in February from 0.25% - its first rise since July 2006.
A few weeks ago it had been expected that Japan would raise rates as early as August.
But with financial markets worldwide struggling from problems triggered by a crisis in the US mortgage sector, analysts began to expect that the Bank of Japan would keep rates on hold.
The combination of a weaker US economy - Japan's largest trading partner - and the stronger yen, which makes Japanese goods more expensive relative to other countries' products, both threaten to undermine Japan's recovery.