Japanese shares were down on Thursday as investors' hopes for monetary easing from the central bank were dashed.
The Bank of Japan held rates unchanged despite coming under pressure to take further action. It had cut interest rates to negative in January but this failed to provide a much needed boost for the economy.
The Nikkei 225 fell by 2.9% to 16,781.69 points. New economic data also showed a slip back into deflation while industrial production expanded. Japan has for years been trying to boost its economy and end a period of stifling deflation. One way to try to achieve this is by monetary policy, which is one of Prime Minister Shinzo Abe's three key "Abenomics" policies to turn around the economy. But even negative rates - meaning commercial banks will be charged if they deposit money with the central bank - have not trickled down to get banks to lend more and companies and people to invest or spend more. Inflation is still far off the 2% target .The BOJ decision to hold rates also sent the yen currency soaring, which is likely to negatively affect the crucial export sector.