The Japanese Nikkei 225 closed around 1.9 percent higher subsequently, having traded 0.3 percent up on the day before the decision was announced. Japanese banking shares rose to close sharply higher, boosted by the news of no further rate cuts.
The Japanese Topix index also rallied, while the yield on 10-year Japanese government bonds turned positive for the first time since March.
Michael Hewson, chief market analyst at CMC Markets, said the move would help Japanese banks but might not have the desired effect on the Japanese economy.
"Japanese policymakers ... appear to have focused their attention on targeting the shape of the yield curve in order to take the pressure off banks, as a flatter yield curve took its toll on bank profitability. Ultimately, while these actions may well help the banks, it's doubtful they will to help the Japanese economy that much and in some ways it shows how little flexibility the central bank has, given how experimental policy is now becoming," Hewson said in a note on Wednesday.
Analysts at Accendo Markets said the Bank of Japan's move could deter the Fed from an immediate rate rise.
"Market sentiment is being helped by the prospect of accommodative policy for longer, even if the BOJ is struggling to deliver. Hopes are also high that the latter's action leaves the Fed in a bind, forcing it to hold off from hiking at all this year," the analysts said in a note on Wednesday.