The Bank of Japan's rate-setting committee has voted unanimously to keep interest rates on hold at 0.5%, in a widely expected move.
Despite data on Thursday showing strong economic growth in the last quarter of 2007, analysts said the bank was concerned by recession fears in the US.
Rates have now been at 0.5% for one year, despite the bank warning they may need to rise to combat inflation.
The economy grew at an annualised rate 3.7% in the last three months of 2007.
This was stronger than most market expectations and was led by strong exports and business demand.
'Mini recessions'
Bank of Japan governor Toshihiko Fukui has repeatedly warned of the inflation risks of keeping rates at 0.5%, but analysts say any rate rise is now unlikely until the full impact of the slowdown in the US economy is revealed.
Some commentators even say rates may be cut, at least temporarily, before the summer.
"Despite stronger-than-expected [Japanese] growth in the October-December quarter, we anticipate mini recessions both in the US and Japan in the first half of 2008," said Morgan Stanley economist Takehiro Sato.
"While the recession should end quickly with a rebound by the US in the second half of 2008, sluggish domestic demand is likely to curtail momentum in Japan."
Japan keeps interest rates level
