Markets may read the statement as a "whatever it takes" moment for expanding the monetary base until Japan begins to see some of the inflation it has long sought.
The BOJ emphasized, however, that it wasn't expecting its moves to be a one-off solution to Japan's economic doldrums, with the pace of economic recovery likely "slow." It said the central bank "should commit itself to expanding the monetary base in the long run."
While the BOJ has booted Japan's economy out of deflation, it has had limited success in generating the desired levels of inflation. In July, Japan's consumer price index (CPI) fell 0.4 percent from the year-earlier month, although it rose 0.3 percent when food and energy were excluded.
The Nikkei was up nearly 2 percent by the market close, compared with gains of around 0.3 percent just before the announcement, and trading slightly negative during the morning session. The Topix tacked on around 2.7 percent.
The dollar was fetching as much as 102.78 yen after the decision, compared with around 101.80 yen just before the announcement and as little as 101.09 yen earlier in the session.
The 10-year Japan government bond yield surged into positive territory, trading as high as 0.011 percent, compared with levels as low as negative 0.062 percent before the announcement. The yield later retreated, trading around negative 0.022 percent at 2:02 p.m. SIN/HK.
The changes indicated the central bank's promised comprehensive review of the effectiveness of its policies was fruitful, and many of the new policies appeared to address critics' concerns about negative effects of the BOJ's aggressive easing measures.
While the central bank refrained from cutting deposit rates deeper into negative territory, it added that options for additional easing included cutting the short-term policy interest rate and reducing the target level for the long-term interest rate as part of its efforts to control the yield curve.
At a press conference following the decision, BOJ Governor Haruhiko Kuroda said the central bank will not hesitate to ease policy further, while adding that the commitment to overshoot inflation was aimed at boosting inflation expectations.
Critics had noted that the BOJ's historical bond-buying efforts had flattened the government bond yield curve. That tends to weigh on the earnings of banks because they borrow at short-term rates to lend at long-term rates; the lack of compensation for taking on risk also tends to discourage banks from lending.
As part of the comprehensive assessment, the BOJ noted that an excessive flattening of the yield curve could have a negative impact on economic activity and dampen sentiment, in part by creating uncertainty over the sustainability of the financial system broadly.