Tokyo, March 15

Japan's central bank chief today defended a negative interest rate policy slammed as a desperate bid to keep alive efforts at resuscitating the world’s number three economy.

Haruhiko Kuroda's comments came after the Bank of Japan (BoJ) held off unleashing more stimulus following a two-day meeting, as it gauges the impact of its unprecedented move into sub-zero rates.

Today's policy announcement was the first since BoJ caught markets off guard in January with its plan to effectively charge commercial banks for depositing some of their reserves in its vaults. The move is aimed at giving banks an incentive to lend out money and stoke growth in wider economy. But it was widely panned as a 'Hail Mary' that showed the central bank was running out of tools to kick-start the economy.

Critics also said it was unlikely to boost loans, given already weak demand from both businesses and the general public. But Kuroda today said policy needed time to ripple through the economy, and that it underscored wide range of monetary policy weapons that the bank has at its disposal.

"Simply put, the negative interest rate policy will further strengthen the past monetary stimulus programme," he told reporters. He added the move would help push down interest rates, resulting in lower borrowing costs for consumers, like on home mortgages.

Kuroda previously cited financial market turmoil and slowing growth in China as he ushered in the minus 0.1 per cent rate for new bank reserves, and said the BoJ may go even further into negative territory.

In 2013, BoJ unveiled what is now an 80 trillion yen ($705 billion) asset-buying plan — similar to the Federal Reserve’s quantitative easing.