The move was widely expected, as policymakers allow more time to see if wage rises will broaden enough to keep inflation sustainably at its 2% target.
But the central bank also signaled its growing belief that conditions for phasing out its huge stimulus were falling into place.
Suggesting an end to negative interest rates could be nearing.
At the two-day meeting that ended on Tuesday, the BOJ kept its short-term rate target at -0.1%.
Negative rates have been in place since 2016 and ending them would be a major shift away from the radical stimulus of former governor Haruhiko Kuroda.
BOJ Governor Kazuo Ueda gave no hints on whether the bank would pull short-term interest rates out of negative territory at its upcoming meetings in March or April - which many economists expect.
He said hopes of Japan hitting the bank's inflation target were rising.
"The prospects of seeing trend inflation hit 2 percent are gradually heightening. That is a desirable development. But it is hard to quantify how close we have come."
His remarks contrasted with those made last month.
In December, Ueda said there was high uncertainty on whether a positive cycle of rising wages and inflation would fall into place.
The central bank's update led to a rebound in the Japanese yen Tuesday.
It also pushed up the country's short-term government bond yield to a one-month high.
That as investors priced in an increasing chance of an end to negative rates in March or April.
