Tokyo - The Bank of Japan decided Tuesday to maintain its key short-term interest rate at 0.5 per cent because the nation's economic growth has been "sluggish" and exports have been weak.

"Economic growth has been sluggish against the backdrop of high energy and materials prices and weaker growth in exports," the bank said in a statement.

The policy board of Japan's central bank voted unanimously at the end of a two-day meeting to forego an interest rate hike after the Japanese government earlier this month said the nation's longest postwar economic expansion might have ended.

But the bank maintained an optimistic outlook by saying the Japanese economy "is expected to return gradually onto a moderate growth path as commodity prices level out and overseas economies move out of their deceleration phase." (dpa)