Bank of Japan Gov. Masaaki Shirakawa said economic recovery will probably take longer than has been expected because "downside risks" to growth are increasing.

"The timing of the recovery may be delayed slightly compared with our initial expectations," Shirakawa said at a news conference after the BOJ Policy Board left the benchmark interest rate unchanged at 0.5 percent in a unanimous vote.

"Downside risks have been rising and warrant attention," he said.

Shirakawa said the best way for central banks to counter the global financial crisis is to keep providing sufficient liquidity.

He said interest-rate policy should be decided based on the economic and price situation in each country, and that any coordinated action not reflecting this would be "undesirable."

In its economic assessment, the BOJ acknowledged that an economic recovery may be delayed, saying there are "substantial uncertainties" about the outlook.

"Economic growth has been sluggish and these conditions may persist for some time given that the slowdown in overseas economies is becoming clearer," the BOJ said.

"The pressure for a rate cut is increasing," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute and a former BOJ official. "The Bank of Japan is admitting the recovery will be delayed, given the weakening economy and tumbling markets."

Banks around the world are hoarding funds, crippling money markets in the U.S. and Europe as the crisis that brought down Lehman Brothers Holdings Inc. spreads. The turmoil has wiped $21 trillion from world stock markets in the past year and prompted investors to sell higher-yielding assets and buy yen.

"Although there are substantial uncertainties, the economy, in the longer run, is expected to return gradually onto a moderate growth path" as energy costs ease and markets abroad pick up, the BOJ said. The words "in the longer run" were absent from last month's statement.