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 BOJ kept interest rates at 0.25% after August's CPI showed a 2.8% increase, reflecting a cautious approach amid economic concerns.

The dollar strengthened against the yen on Friday after the Bank of Japan left interest rates unchanged and indicated that it was not in a hurry to hike them again. The BoJ could afford to spend time eyeing the fallout from global economic uncertainties,

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.

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 kept its monetary policy steady Friday, signaling it sees no need to hurry with interest rate hikes as it monitors financial markets after its July increase and hawkish views spooked investors.

The Bank of Japan kept interest rates steady on Friday and maintained its view the economy remained on track for a moderate recovery.

Markets are focusing on any hints from Governor Kazuo Ueda on the timing and pace of future rate hikes at his post-meeting news conference. As widely expected, the BOJ kept short-term interest rates steady at 0.