The Bank of Japan held fire on expanding its unprecedented monetary easing scheme on Tuesday but said the economy was being dragged by a slowdown in key emerging markets, while it was forecast to unveil further measures "before too long".

The central bank announcement came as a fears about the outlook for China -- Asia's top economy and a major market for Japanese exporters -- has caused turmoil in global markets.

After a two-day meeting, the BoJ kept its 80 trillion yen ($665 billion) annual asset-buying scheme unchanged, saying in a statement the economy "has continued to recover moderately, although exports and production are affected by the slowdown in emerging economies".

Investors are now looking to a news conference by BoJ governor Haruhiko Kuroda slated for 3:30 pm (0630 GMT).

The decision came despite data showing Japan's economy shrank 0.3 percent in the three months to June, hit by a softening of exports to major trade partner China.

The country's near-zero inflation rate is also far below the BoJ's 2.0 percent target. Boosting prices has been a cornerstone of efforts by Prime Minister Shinzo Abe to conquer years of damaging deflation that has sapped growth.

The disappointing figures had rekindled speculation that the central bank might have to unleash yet more stimulus to prop up a faltering recovery that is refusing to take root.

But Marcel Thieliant of Capital Economics said in a client note: "The Bank of Japan's more cautious assessment of economic conditions suggests that policymakers will announce additional monetary stimulus before too long."