The Bank of Japan is likely to start open-ended asset purchases immediately rather than in 2014 and consider setting a new target to buy longer-dated bonds at its rate review next week, sources say, in a fresh show of resolve to beat deflation.
Under its current monetary easing tool, the BOJ has pledged to pump 101 trillion yen ($1 trillion) into the economy by the end of this year through an asset-buying and lending program. It had also agreed in January to start open-ended purchases from next year by buying 2 trillion yen of bonds a month.
The central bank is scheduled to review policy on April 3-4, the first meeting under new BOJ Governor Haruhiko Kuroda.
He has said the central bank will seek to push down yields across the curve by purchasing longer-dated bonds, and that he will act with speed to achieve the central bank's 2 percent inflation target in two years.
At the meeting, the central bank is likely to boost asset purchases and extend the duration of bonds it targets to five years or even longer, from the current three years, said sources familiar with its thinking.
"If the BOJ were to increase asset purchases, it will likely target longer-dated government bonds," said a source. The sources spoke on condition of anonymity due to the sensitivity of the matter.
In doing so, the central bank is likely to switch to open-ended asset purchases immediately and consider setting a new target for monthly bond purchases, they said.
It may also set a target for the balance of its total asset holdings, although no decision has made yet, the sources said.