Bank of Japan Governor Haruhiko Kuroda ruled out the chance of additional monetary easing, even after heightening overseas risks forced the central bank to temper its optimism that robust exports and factory output will support growth.

Kuroda also brushed aside growing calls from politicians and bank executives to raise interest rates or water down the BOJ's 2% inflation target to ease the strain of prolonged ultra-low rates on financial institutions' profits.

At the two-day rate review that ended on Friday, the BOJ maintained a pledge to guide short-term rates at minus 0.1% and 10-year government bond yields around zero percent. It also said it would continue to buy Japanese government bonds.

Factories across the globe slammed on the brakes last month as demand was hit by the U.S.-China trade war and slowing global growth. In a nod to the increased risks, the BOJ cut its assessment on overseas economies to say they are showing signs of slowdown. It also revised down its view on exports and output.

Kuroda acknowledged the challenges the economy faced but gave no indication there would be any additional stimulus. "It is true Japan's exports and output are being affected by slowing overseas growth," Kuroda said. "On the other hand, domestic demand continues to grow. As such, we maintain our baseline view that the economy is expanding moderately."

He said while it would likely take longer to achieve the BOJ's price target, most board members thought it most appropriate to "patiently maintain" current stimulus given some improvement in the output gap.

The BOJ faces a dilemma. Years of heavy money printing for asset purchases have dried up market liquidity and hurt commercial banks' profits, stoking concern over the rising risks of prolonged easing.

And yet, subdued inflation has left the BOJ well behind other major central banks in dialling back crisis-mode policies, leaving it with little ammunition to battle the next recession.

While Kuroda insists that hitting 2% inflation remains a priority, politicians and economists are increasingly expressing doubts about the target.

Finance Minister Taro Aso said on Friday that "things could go wrong" if the BOJ insisted too much on achieving 2% inflation.

Kuroda said the target was an important tool the BOJ uses to achieve its mandate of price stability.

"Inflation is affected by oil price moves and various other factors. We also need to understand it would take some time for inflation to pick up in Japan after a long period of low growth and deflation," Kuroda said, when asked about Aso's remarks.

Many in the BOJ expect Japan's economy to emerge from the current soft patch in the second half of this year, assuming Beijing's stimulus plans can revive Chinese demand.

The biggest worry among BOJ policymakers is that weakening exports and output will hurt corporate sentiment, prompting firms to delay capital expenditure and wage hikes.

Kuroda said that while such a risk cannot be ruled out, the chance of a deep economic downturn remains small.

The USD/JPY bulls have registered a daily close back above the 200-day moving average, which is currently at 111.44, which has strengthened the underlying bullish market structure. We opened EUR/JPY long at 126.00 in anticipation for gains to our 129.00 target.

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