The Bank of Japan has opted to keep its key interest rate unchanged at 0.5% for the seventh month in a row.
Japan relies heavily 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.
However, some analysts believe that when market stability returns, Japan will resume rate rises.
There have been concerns that a slowdown in the US economy - Japan's biggest market - could hit exports.
But demand from emerging markets and Europe has offset some of this, analysts say.
The Bank of Japan last raised rates in February, when it increased the benchmark rate to 0.5% from 0.25%.
However, expectations that Japan would raise rates soon were dashed by the turmoil on global financial markets which had been triggered by the crisis in the US mortgage sector.
The Bank of Japan move came hours after the US Federal Reserve cut interest rates to 4.75% from 5.25%.
Government officials and investors in Japan welcomed the Fed's move.
"They have reacted very quickly to the realities," said Kaoru Yosano, Japan's chief government spokesman.