The Bank of Japan left interest rates unchanged on Friday, but governor Kazuo Ueda said further hikes remain on the cards if the economy grows as predicted.

The Bank of Japan is set to keep monetary policy steady on Friday, but signal its confidence that solid wage growth and consumption will allow the central bank to raise interest rates again in coming months.

The Bank of Japan has opted to hold short-term interest rates, pointing to a moderate recovery in the economy but warning that “high uncertainties” remain in the outlook for activity and prices. In a widely expected decision on Friday,

Japanese inflation rose slightly in August, with prices up 2.8 percent year-on-year, official data showed Friday, hours before the Bank of Japan was widely expected to leave interest rates unchanged.

Japan's core consumer inflation accelerated for the fourth straight month in August and tracked comfortably above the central bank's 2% target, data showed on Friday, keeping alive expectations for further interest rate hikes.

Japan’s key inflation gauge accelerated in August for a fourth consecutive month, hours before the Bank of Japan is scheduled to wrap up its latest policy decision meeting.