(fxcue news) - The Bank of Japan left its key interest rate unchanged as widely expected on Thursday and retained a cautious approach as political instability and looming US presidential election added concerns about economic outlook. In a unanimous vote, the Policy Board decided to maintain the uncollateralized overnight call rate to remain at around 0.25 percent. This was the highest since late 2008. The BoJ had ended its negative interest rate policy in March and last lifted the benchmark rate in July to the current level. So far the bank has tightened the policy twice this year. The bank said it needs to pay close attention to overseas economies, especially the US, and developments in global financial markets. While US election due next week added uncertainty surrounding overseas economies, the ruling Liberal Democratic Party's election loss added domestic uncertainty. Capital Economics' economist Marcel Thieliant said he expects a new government to be formed and a supplementary budget to be passed by the time of the Bank's next meeting in December. With inflation excluding fresh food and energy picking up again in recent months and set to hover above the 2 percent target over the next few months, there is a strong case for another rate hike as soon as December, the economist added. However, further tightening is unlikely in 2025, he said. In the latest, Outlook for Economic Activity and Prices, the bank said the economy is likely to keep growing at a pace above its potential growth rate. The bank upgraded its economic growth for the fiscal 2025 and retained the projections for the fiscal 2024 and 2026. The economy is forecast to grow 0.6 percent in the fiscal 2024. Meanwhile, growth outlook for the fiscal 2025 was raised marginally to 1.1 percent from 1.0 percent and that for the fiscal 2026 was retained at 1.0 percent. The projected inflation for the fiscal 2025 was somewhat lower due to factors such as the recent decline in crude oil and other resource prices. Inflation was seen at 1.9 percent, down from 2.1 percent estimated in July. Inflation forecast for 2024 was maintained at 2.5 percent and that for 2026 at 1.9 percent.