BOJ keeps policy steady, sticks to rosy economic view

TOKYO (Reuters) - The Bank of Japan kept monetary policy steady on Wednesday and maintained its optimistic view on the economy, even as escalating global trade frictions clouded the outlook.

In a widely expected move, the BOJ maintained its short-term interest rate target at minus 0.1 percent and a pledge to guide 10-year government bond yields around zero percent.

The central bank also left unchanged a new forward guidance, adopted in July, that pledges to keep interest rates extremely low for an extended period.

The decision on maintaining its interest rate targets was made by a 7-2 vote with board members Goushi Kataoka and Yutaka Harada dissenting.

"Japan's economy is expanding moderately," the BOJ said in a statement announcing the policy decision.

BOJ Governor Haruhiko Kuroda will hold a news conference at 3:30 p.m. (0630 GMT) to explain the policy decision.

With soft inflation forcing it to maintain its massive stimulus longer than expected, the BOJ took measures in July to make its policy framework sustainable such as allowing bond yields to move more flexibly around its target.

(Reporting by Leika Kihara, Stanley White, Tetsushi Kajimoto and Kaori Kaneko; Editing by Chang-Ran Kim)