The Bank of Japan kept interest rates steady on Tuesday and decided to slow the pace of reduction in its bond purchases from next fiscal year, signalling its preference to move cautiously in normalising still-easy monetary policy.

The Bank of Japan kept interest rates unchanged Tuesday and said it would taper its purchase of government bonds at a slower pace amid concerns about the effect of trade uncertainty on the world's number four economy.

The Bank of Japan will slow the scaling back of its government bond purchases from the next fiscal year to deter upward pressure on long-term interest rates.