Japan's central bank announced an unexpected round of new stimulus measures Friday to complement its vast asset-buying scheme, pushing the yen down sharply and giving a brief boost to Tokyo share prices.
The move came soon after the Federal Reserve's first interest rate cut in almost a decade and highlights the divergence in monetary policy between the surging United States economy and its rivals.
After wrapping up their last meeting of the year, Bank of Japan policymakers said they would boost their holdings in firms dedicated to capital investment and hiring.
They also made some other tweaks, including plans to buy slightly longer-term Japanese government bonds starting next year.
The announcement comes as analysts raise concerns the BoJ would struggle to buy enough bonds under its 80 trillion yen ($654 billion) annual asset-buying scheme -- which effectively prints money to spur lending.
BoJ chief Haruhiko Kuroda is expected to speak about the changes at a news briefing later Friday.
"The market took it as a surprise, but the impact of the measures is unclear," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
"At least we can sense that the Bank of Japan wants to press on the gas pedal. For the market, it could be a Christmas present a week early."
News that the BoJ had tinkered with policy shocked markets, which had expected it to stay its hand for now although the reaction was short-lived.
The Nikkei, which was in the red by the lunch break, jumped more than two percent right after the announcement but returned to negative territory shortly after.
And the dollar jumped to 123.13 yen from 122.56 yen earlier in Tokyo before also settling back.
- 'Penchant for surprises' -
The central bank's stimulus, launched more than two years ago, is a cornerstone of Prime Minister Shinzo Abe's attempt to kickstart the long-lumbering economy with a policy blitz dubbed Abenomics.
The drive to defeat years of growth-sapping deflation has had a limited impact on the wider economy, however, despite sharply weakening the yen in a boost for exporters and stoking a stock market rally.
The BoJ's move to hike its holdings in firms that invest in new equipment and hire more workers comes as Tokyo's struggles to convince cautious companies to lift wages.
"Under this new programme, the bank will purchase ETFs (exchange-traded funds) composed of stocks issued by firms that are proactively making investment in physical and human capital," it said in a post-meeting statement.
ETFs hold assets, including shares and bonds, that trade on stock exchanges.
"Governor Kuroda has a penchant for surprises, and he delivered another one today," said Marcel Thieliant at research house Capital Economics.
"These are all helpful measures, but they won't make much difference in practice."
He added that the bank's plan to boost buying of such funds by 300 billion yen annually was "miniscule".
Kuroda last year shocked markets with an unexpected expansion to the asset-purchase scheme.
Japan's economy saw a slight uptick in the July-September quarter, rising 0.3 percent -- and reversing an earlier forecast of a contraction that had put the country recession for the second time in as many years.
But a lacklustre global economy, marked by the slowdown in China and weakness in emerging markets, are posing challenges to the recovery.