New Delhi, Sept. 19 -- Japan's central bank kept its key interest rate unchanged at 0.5% Friday, in a decision that was widely expected, given recent inflation trends that have stayed above target.

The Bank of Japan issued its decision on the overnight call rate after a two-day meeting by its policy board.

"Japan's economy has recovered moderately, although some weakness has been seen in part. Overseas economies have grown moderately on the whole," it said in a statement.

The U.S. Federal Reserve cut its policy rate by 0.25 percentage points earlier this week, the Fed's first cut since December, and lowered its short-term rate to about 4.1%, down from 4.3%.

Japan had been ailing from deflationary trends in recent years, but prices are...