Latest minutes from the Bank of Japan (BOJ) released Tuesday reveal that the central bank's surprise move in October to expand its already-massive stimulus program was about sending the message that it will do whatever it takes to "conquer deflation."
"The BOJ intended to send a strong message, beyond the financial markets, to jolt the wider economy," said Shun Maruyama, Chief Japan Equity Strategist at BNP Paribas. "Consumer and business leaders remain unmoved by monetary policy."
Consumer inflation looks set to stall at around 1 percent, half of the BOJ's stated target, he added, noting capital investments are picking up but not by enough to boost economic growth.
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The BOJ's commitment to pull the country out of two decades of deflation remains "unshakable", according to the minutes from its policy meeting on October 31, when the central bank expanded its asset purchase program by 30 trillion yen to 80 trillion yen.
"If no policy action was taken at this meeting, this could be understood as a breach of the commitment (to achieve its inflation target of 2 percent), thereby possibly impairing the Bank's credibility significantly," said one board member.