The Bank of Japan left its dovish policy unchanged Friday, refusing to cave in to mounting pressure to act over the fast-falling yen and brushing off fresh speculation that it might follow other central banks in moves to fight inflation.

The BOJ, which ended its two-day policy meeting the same day, decided to stay the course on its aggressive easing program, which includes negative interest rates, so-called yield-curve control and asset purchases.

While many economists had predicted that the BOJ was unlikely to shift its policy this time, the U.S. Federal Reserve’s decision Wednesday to introduce a 0.75 percentage point rate hike — its largest since 1994 — as part of increased efforts to curb inflation had fueled speculation among some market observers that the BOJ might change course.

The central banks of the U.K. and Switzerland have decided to raise interest rates as well, while the European Central Bank is set to raise interest rates in July for the first time in 11 years.

On top of that, the weakening of the yen against the dollar has accelerated this month, with the currency plunging to the ¥135 level and hitting a 24-year low, driving up already high import costs even further.

The BOJ also maintained its yield-curve control, a policy of purchasing unlimited amounts of 10-year government bonds at a fixed rate of 0.25% in an attempt to cap the rise of yields, even though the wider interest rate gap between the U.S. and Japan is expected to put the yen under heavier selling pressure. Still, the rate rose to 0.265% on Friday, topping the BOJ’s cap.

“The Japanese economy, which is still on the way to recovering from the pandemic, is facing downward pressure stemming from soaring commodity prices, so we need to support it firmly from the financial side,” BOJ Gov. Haruhiko Kuroda said during a news conference after the policy meeting.

Many questions from reporters focused on how the BOJ is watching foreign exchange markets, as the bank included a rare mention of exchange rates in its monetary policy announcement.

“It is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on Japan's economic activity and prices,” the announcement said.

Kuroda said no central banks in any country run their monetary policy with the intention of controlling currency rates, as their job is to stabilize prices. But “it is true that exchange rates have an impact on the economy and prices, so we will closely monitor their development.”

The bank reaffirmed its commitment to its ultraloose monetary policy, as it aims to realize its 2% inflation goal. Although Japan’s core consumer inflation topped 2% in April, the BOJ has said it was pushed up by soaring commodity prices stemming from the COVID-19 pandemic and the Russia-Ukraine war, adding that this is not healthy inflation.

Even though the BOJ maintained its policy stance this time, Kuroda, whose term is scheduled to end in April 2023, is expected to continue to face pressure from markets and the general public for the time being.

“It could be the case that from here on, every time the BOJ holds a policy meeting, there will be high expectations from the market” that the central bank will raise interest rates, said Saisuke Sakai, senior economist at Mizuho Research and Technologies. “But the BOJ probably won’t raise rates until a new governor takes office in 2023.”

Unlike the U.S., where the fundamentals of the economy are stronger due to rising wages and robust consumer spending, Japan’s economy is still wobbly, he said, with gross domestic product in the January-March period contracting at an annualized pace of 1% amid weak consumer spending.

“Maintaining the current monetary policy was an appropriate decision,” said Sakai. “If the BOJ changes its monetary policy when the economy is struggling and further dampens the economy, they would risk being blamed for it.”

Although inflation in Japan is not as bad as in other countries, prices have been increasing and will continue to do so, as many companies plan to pass higher costs on to consumers.

As the impact of inflation has become more visible, discontent among the public has grown.

According to a poll conducted this week by Jiji Press, 54.1% of respondents said the government is not doing a good enough job to deal with price hikes, up 4.3 percentage points from the previous month, while those who have a favorable view of the government’s actions dropped 2.9 points to 13.8%.

Kuroda himself had to issue a rare apology last week after his comment that Japanese households have “higher tolerance” for price hikes drew criticism. He retracted the comment and said that households are instead being forced to accept the situation.

As measures against inflation are a key issue for political parties ahead of the Upper House election, which is scheduled for July 10, voters’ interest in this issue is only expected to grow.

Economists have said that the BOJ is unlikely to change its policy to stop the yen weakening unless the government asks it to do so. The government, for its part, needs the central bank to maintain its negative interest rate policy for the time being to keep borrowing costs down, so as to support Prime Minister Fumio Kishida’s spending plans.

The government’s annual economic policy guideline approved earlier this month states that the government expects the BOJ to commit to achieving its 2% inflation target “in a stable and sustainable manner,” implying that the central bank will continue its monetary easing for now.