The Bank of Japan delivered its third dose of monetary stimulus in four months today in a prelude to more aggressive action next year.
The bank is facing intensifying pressure from the country's next leader for stronger efforts to beat deflation.
Shinzo Abe, whose opposition LDP won Sunday's election by a landslide, has put the central bank's independence on the line by repeatedly calling for a binding 2% inflation target.
This is double its current price goal.
The Bank of Japan expanded its asset-buying and lending programme by 10 trillion yen ($119 billion) to 101 trillion yen, a widely expected move to ease monetary policy in response to the intense political pressure.
It also signalled a review of its current 1% inflation target at its next policy-setting meeting in January, when Abe will have a new cabinet in place ready to negotiate with the central bank.
"The Bank will discuss at the next meeting the medium- to long-term price stability it aims to achieve in the conduct of monetary policy," the central bank said in a statement after today's meeting.
With the latest action, the Bank of Japan has expanded asset purchases five times this year, the most frequent activity during single year in a decade. The last time it eased so many times was in 2001, when then Governor Masaru Hayami was battling a domestic banking crisis.
Markets had priced in the bank's action, with 14 out of 19 economists polled by Reuters last week expecting further easing via an increase in asset purchases.
The yen has fallen almost 9% against the dollar since September, as Abe's emergence as the likely next prime minister raised market expectations of more expansionary policy and spending.
Abe has said once he forms a cabinet on December 26 he will instruct his ministers to begin working with the BOJ on setting a shared inflation target.
Some in the Bank of Japan had wanted to delay any action until January, when there is more clarity on the new government's policies and when the central bank conducts a quarterly review of its long-term growth projections.
But that was too costly with business sentiment already slumping and companies delaying capital spending plans on weak global demand, adding to evidence that any rebound from recession early next year will be minor, analysts say.
