The Japanese economy is "under strong downward pressure" in the wake of the damage caused by the earthquake and tsunami, the Bank of Japan (BOJ) says.
Lost production and disrupted supply chains are the main cause of the downward pressure, the central bank told the BBC.
The BoJ has kept its monetary policy unchanged. Interest rates remain in the range of zero to 0.1%.
It says it will offer ¥1trn ($11.7bn; £7bn) in new one-year loans, which will be extended to financial institutions in quake-hit areas at an interest rate of just 0.1%.
Analysts say given the current situation, the central bank is unlikely to alter its monetary policy for the time being.
"The BOJ sees no need to ease policy further and will stand pat for the time being, unless the nuclear crisis worsens significantly or production struggles to recover in the coming months," says Masamichi Adachi of JP Morgan Securities in Tokyo.
However, Adachi warns the bank is likely to issue a further warning of its impact on economic growth, once, the full extent of damage caused by the quake and tsunami becomes clear.
"The BOJ will cut its economic forecasts for the current fiscal year but may raise its estimates for the next fiscal year in its economic outlook report later this month," he says.
"Such an outcome would not warrant a change in monetary policy, at least for now," he says.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress