TOKYO — Japan's central bank kept its already low interest rates on hold Friday amid further signs of rapidly deteriorating conditions at home and in the global economy.

The Bank of Japan had cut its benchmark rate to 0.3 percent from 0.5 percent last month, so expectations for another rate reduction so soon were low. It also leaves Japan, with the lowest interest rates among major economies, with very little wiggle room to loosen policy in the future.

Key economic data this week paint an even grimmer outlook for the world's No. 2 economy, which has slipped into a recession in the third quarter. Japanese exports in October suffered their biggest decline in seven years, leading the country to post a rare trade deficit.

Major manufacturers like Toyota Motor Corp. and Isuzu Motor Co., hit by waning global demand, have announced production cuts.

"If financial conditions, as reflected in lending attitudes of financial institutions and issuing conditions in the corporate bond and (commercial paper) markets, should increase in severity, pressures acting to depress economic activity from the financial side may become more marked," the central bank said in a statement.

The Organization for Economic Cooperation and Development says Japan's economy will shrink 0.1 percent next year, compared with a 0.9 percent contraction in the U.S. and a 0.5 percent pullback in Europe.

Most economists, however, expect the BOJ to keep interest rates on hold for the time being.

The Bank of Japan said that it would closely monitor economic developments and implement monetary policy "appropriately."

It also pledged to provide ample funds in the money market, particularly over the year-end and fiscal year-end, and carry out purchases of commercial paper under repurchase agreements "more flexibly to facilitate corporate financing."