The Bank of Japan kept interest rates steady on Tuesday and decided to slow the pace of reduction in its bond purchases from next fiscal year, signalling its preference to move cautiously in normalising still-easy monetary policy.

The Japanese central bank held its policy rate unchanged at 0.5%, the level it has been at since the last hike in January. BOJ Gov. Kazuo Ueda has said the bank will continue to seek further interest-rate increases,

The Bank of Japan left its benchmark rate unchanged and unveiled a plan to slow its withdrawal from the bond market from next year in a sign of caution following heightened market volatility.