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The surprise decision came just days after the bank's governor, Haruhiko Kuroda, suggested he had dismissed any drastic easing measures to boost business confidence.
But he also urged the Government to introduce "significant policies to support growth", including a more aggressive reduction in red tape and "the earliest possible introduction of credit easing measures to improve the flow of lending to viable businesses".
But I would also like the Bank of Japan to take powerful monetary easing measures to get the country out of deflation," Seiji Maehara, the economics minister, told a news conference Monday.
Meanwhile, the European Central Bank (ECB) is expected to instate 'quantitative easing' measures to help prevent the euro zone from sliding into deflation.
On the monetary policy side, central bankers could expand their easing measures to allow for more private safe asset creation (Figure 1). Figure 1 - While the first round of quantitative easing (QE) was designed to limit the fall in money and safe asset supply, the U.S. Federal Reserve's willingness to execute QE2 and QE3 helped boost creation of private safe assets and money equivalents.
But some other analysts are calling for more easing measures to arrest the economic slowdown.
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"While data will look better from here on, the Bank of Japan will still need to announce additional monetary easing measures this quarter to abet the recovery".
"We expect more decisive easing efforts to come through in coming months," said Qu Hongbin, an economist at HSBC. "As external demand has weakened and domestic demand hasn't shown a meaningful improvement in response to earlier easing measures, growth is likely to be on track for further slowdown".
"Given the scale of insurance required, a package of mutually complementary monetary policy easing measures is likely to be necessary.
In the US, where growth of nearly 2% is forecast for this year, the OECD said quantitative easing measures might need to be "gradually reduced".
These easing measures are subtle.
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CEO of Professional Science Editing for Scientists @ prosciediting.com