The Bank of Japan (BoJ) on Wednesday cut its growth and inflation forecasts for the world's third-largest economy, but said a recovery was still underway as it held fire on more easing measures.

Following a two-day policy meeting, the BoJ said Japan's economy would expand 1.7 percent in the fiscal year to March 2016 while inflation would come in at 0.7 percent.

That was down from 2.0 percent and 0.8 percent, respectively, estimated earlier this year.

BoJ policymakers have been scaling back their expectations in recent months, as governor Haruhiko Kuroda conceded that an ambitious 2.0 percent inflation target was still some way off.

Kuroda will hold a regular post-meeting news briefing later Wednesday.

Japan's economy expanded 1.0 percent in January-March after limping out of recession in the last three months of 2014, and business confidence remains strong.

But consumer spending has struggled after a sales tax rise last year and economists widely expect the BoJ to ramp up its easing programme, likely later this year, to bring Japan closer to its inflation target.

The target is a cornerstone of Prime Minister Shinzo Abe's drive to conquer years of stagnant or falling prices and revive the economy.

On Wednesday, the BoJ stood pat on its record asset-purchase programme, which is pumping about 80 trillion yen ($648 billion) into the financial system annually in a bid to jack up prices and kickstart growth.