The Bank of Japan surprised markets Friday by announcing plans to increase purchases of exchange-traded funds (ETFs) and lengthening the maturity of bonds it purchases to encourage investment in the economy.
The BOJ said under the new program, it will purchase ETFs at an annual pace of 300 billion yen ($2.45 billion) composed of stocks issued by firms "proactively" investing in physical and human capital.
The plan will start with purchases of ETFs tracking the JPX-Nikkei Index 400, which screens for factors including corporate governance and investor-focused management.
The new ETF purchase program will begin in April and is in addition to the current ETF purchase program of around 3 trillion yen annually.
The BOJ meanwhile held rates steady and said it will stick to its plan to increase the monetary base by 80 trillion yen a year, as expected.
"Governor (Haruhiko) Kuroda has a penchant for surprises, and he delivered another one today," Marcel Thieliant, senior Japan economist at Capital Economics, said in a note Friday.
After the decision, the Nikkei retraced early losses, climbing as much as 2.7 percent, before returning to negative territory and closing down 1.9 percent. The dollar rose against the yen initially, fetching as much as 123.58 yen, compared with around 122.40 yen before the decision. The pair later retraced gains, with the dollar fetching 122.17 yen around 0437 GMT.
The BOJ's new ETF program is aimed in part at offsetting the possible market impact of the the central bank's sales of stock it has purchased from financial institutions since 2002, the BOJ statement said. It plans to take 10 years to sell those shares at a pace of around 300 billion yen annually.
The BOJ also said it would change the average maturity of its Japan government bond (JGB) purchases to 7-12 years next year from around 7-10 years at the end of this year.
But while the BOJ statement made an initial splash in markets, it isn't clear that it adds up to much.
"These are all helpful measures, but they won't make much difference in practice," Capital Economics' Thieliant said, noting that the 300 billion yen in additional ETF purchases is "minuscule."
But he did note that the BOJ was a bit more upbeat on Japan's economy than at the bank's previous meeting.
"Revised data released last week showed that gross domestic product expanded in the third quarter instead of shrinking slightly as initially reported, and industrial production figures for October suggest that economic activity continued to recover in the fourth quarter," Thieliant said.
"Meanwhile, underlying inflation has been holding up. All this suggests that there is no pressing need to step up the of easing, and we expect policymakers to leave policy settings unchanged at the upcoming meeting in January."
At a press conference after the BOJ statement, Governor Kuroda said the new steps aren't additional monetary easing and were not taken in response to economic data. He added that he didn't think downside risks to the economy have increased.
The new measures were aimed at ensuring the current program proceeded smoothly and to enable the BOJ to act without hesitation, if needed, Kuroda said.
Others also didn't see the BOJ's steps as marking a major move.
"At the margin, today's decision represents a very mild easing of policy," ANZ said in a note Friday. "The BOJ's statement didn't say much that would give the impression that a shift in policy stance was required. The BOJ likely took the opportunity with the 2016 buying plan to tweak things slightly. Although the BOJ did not alter the size of its asset purchase program, these slight tweaks (duration extension and extra ETFs) at the margin could be considered to be slightly stimulatory."
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter