Since stunning the markets with unprecedented monetary easing in April, the Bank of Japan has taken a back seat, failing to offer solace to investors that have been rattled by violent swings in the country's bond and equity markets.
According to Kathy Lien, managing director, BK Asset Management, the central bank's "overconfidence" is to blame for the instability plaguing the market.
"They did nothing because they were stubborn and overconfident that their policies were enough to stabilize markets and the markets said no," Lien told CNBC Asia's "Squawk Box" on Friday.
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"This is Japan's own doing, they had the opportunity to provide markets with a small dose of stimulus in the form of increasing asset purchases or even the maturity on fund supply operations and they did nothing," she added.
Lien was referring to the BOJ's meeting this week when the central bank failed to announce additional measures like increasing the maturity on its fixed-rate loan facility to two years from one year.
Prime Minister Shinzo Abe's recent announcement of his longer term growth strategy which fell short of expectations, coupled with the disappointment with the BOJ has forced investors to reassess their outlook for the market.
The Nikkei 225 descended into bear market territory for the second time in a week on Thursday, after losing 6.4 percent in a single day. However, the recent losses have led to some bargain hunting, lifting the index around 3 percent on Friday. Japanese government bond (JGBs) yields also hit a one-year high around 1 percent in late-May.
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"They [BOJ] feel their weekly operations are sufficient to calm the [bond] market volatility - The market is saying the BOJ needs to be a little more active than that," she said.
At this point, Japan watchers say it is vital that BOJ Governor Haruhiko Kuroda betters his communication with the market in order to restore investor confidence.
It's a failure to communicate. For example, the governor of BOJ saying 'I think we've done enough' is the wrong thing to say. The correct thing to say is that 'There is no limit to what we are prepared to do'. The psychology is really important with this," said Nicholas Smith, Japan strategist at CLSA.
In April, Kuroda said the Bank of Japan's plans to double the monetary base would be enough to achieve its 2 percent inflation goal, noting that the central bank has taken all the "necessary" and "possible" measures.
A contrast from European Central Bank Chief Mario Draghi who pledged to do"whatever it takes" to save the euro zone last year.
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With investors on edge in the face of uncertainty over when the Federal Reserve will begin scaling back its bond buying program, it has become increasingly important for major central banks to clearly communicate their intentions, said strategists.
David Kotok, chief investment officer, Cumberland Advisors, agrees, noting that recent havoc in global markets is largely a result of poor communication by both Kuroda and Bernanke.
"You had a failure to communicate in two central banks at the same time - two of the G-4 botched it up. Bernanke did - he sent a mixed message and stirred a pot. The BOJ has done the same," he said.
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However, both central banks will likely try to resolve the instability they have generated in the markets, Kotok said.
"I believe both banks didn't intend to do that. Central bankers don't want to create a mess - they want to create recovery in real terms in their economies. When a central bank says that's what I want, they can do it believe them," Kotok added.
— By CNBC's Ansuya Harjani