Japan's central bank kept its monetary policy unchanged Friday, but hinted it could expand its already expansive stimulus in the future to counter slowing exports and other threats to growth. The decision came despite fresh evidence that the Bank of Japan is making little headway in its unprecedented effort to spur inflation in the world's third largest economy. Data for September showed the core inflation rate, which excludes volatile food prices, was minus 0.1 percent while household incomes and spending also fell. In a statement, the Bank of Japan cited slowing growth in China and other emerging markets as a factor behind weakening exports and industrial production. Hinting it may consider further action later, the BOJ said it would study risks to economic activity and prices "and make adjustments as appropriate."

Prime Minister Shinzo Abe's economic policies are aimed at incresing spending, both by keeping interest rates at record low levels and by fostering expectations that inflation will erode future purchasing power.

But the economy contracted at a 1.2 percent annual rate in the April-June quarter and many economists expect it to have again lost ground in July-September.

Data released earlier this week showed stronger-than-expected manufacturing output in September. That may have alleviated pressure on the BOJ to take further action to spur growth.

Overall inflation was flat from a year earlier. Household spending fell 0.4 percent in September from a year earlier, while incomes slipped 1.5 percent.Tight labor conditions are expected to force companies to raise wages, in turn causing inflation to rise. But companies have expanded overtime and hired more part-time workers, to avoid significant increases in labor costs.

The plunge in oil prices over the past two years has also sapped any inflationary pressure, further diluting any impact from monetary easing, said Richard Katz of the Oriental Economist.