TOKYO – The head of Japan's central bank said Tuesday that while global financial turmoil is intensifying, each country should manage monetary policy independently, damping speculation of coordinated rate cuts by major economies.

Despite heightened anxiety about the financial meltdown spreading from Wall Street to Europe and beyond, Bank of Japan Gov. Masaaki Shirakawa offered a muted sense of urgency about its potential impact on Japan.

“It is not desirable to undertake policy coordination that would involve measures inappropriate for each country's economic and price situation,” Shirakawa said.

The comments threw cold water on expectations that financial officials from the Group of Seven countries may propose a coordinated, emergency policy move during their meeting later this week.

Earlier in the day, the central bank left its key interest rate unchanged at 0.5 percent for the 20th straight month, citing a “sluggish” economy along with high inflation rates.

The BOJ said in its statement that the economy will likely remain lethargic “for the time being as a slowdown in overseas economies becomes more evident.” However, it maintained its long-held stance that the world's second-largest economy would eventually return to a “moderate growth path.”

The decision followed news from Sydney that Australia's central bank cut its official interest rate by a bigger-than-expected 1 percentage point to 6 percent, a move that lifted Australian stocks and some other regional markets on hopes that other central banks would follow suit.

Shirakawa's comments disappointed market observers, who had expected a more proactive stance in light of recent bank failures overseas and plunging equity markets, said Hitomi Kimura, a fixed income strategist at JP Morgan Securities in Tokyo.

Instead, what they got was more of the same.

“People were hoping that the BOJ would show more understanding in what has been going on in the markets, that (the central bank) is on alert to be ready to take action,” she said.

Japan's benchmark stock index dropped to the lowest in almost five years on Tuesday as selling spread across the board. The Nikkei 225 lost 3.0 percent to close at 10,155.90 – its lowest finish since December 2003.

Shirakawa blamed the recent weakness in Japanese stocks on overall global declines.

“We will be monitoring stock price movements, as well as their impact on the economy and financial markets,” he said.

Merrill Lynch economists Takuji Okubo and Masayuki Kichikawa doubt that the Bank of Japan will lower its main interest rate – already so low – anytime soon.

Earlier Tuesday the Bank of Japan injected another 1 trillion yen ($9.9 billion) into the money market in its 15th straight day of emergency operations to foster smoother lending among banks.

The Bank of Japan's quarterly “tankan” survey released last week revealed a troubling snapshot of the world's second-largest economy: waning corporate sentiment, lower profit forecasts and a pullback in capital spending.

Major Japan manufacturers were the gloomiest in five years, and with demand slumping overseas they were bracing for more turbulence in the months ahead.