Japan's central bank on Tuesday kept its policy steady as widely expected.
The big news out of the central bank is that it would make its policy framework more flexible for the long-term yield target.
The BOJ maintained its target for the 10-year government bond yield at around zero percent and the short-term interest rate target at minus 0.1 percent, however. In a statement, it explained that the yields may move up or down "to some extent mainly depending on developments in economic activity and prices."
The decision comes after speculation last week that the Bank of Japan had been actively discussing changes to its policies, which caused Japanese government bond prices to fall steeply, and drove the benchmark 10-year yield to hit its highest in nearly six months.
The BOJ also acknowledged that it will take "more time than expected" to achieve its inflation target of 2 percent.
Soon after the announcement, the yield on U.S. 10-year Treasurys fell almost 3 basis points to 2.950 percent. The yen weakened, with the dollar gaining 0.25 percent against the yen to 111.33, and the Nikkei share average turned positive.
Joseph Capurso, senior currency strategist at the Commonwealth Bank of Australia, said that the policy tweaks are "too small" to have an impact on Japan's economy.
"We consider the BoJ's policy tweaks too small to make much difference to the outlook for Japanese GDP growth or inflation. Our long held view that Japanese inflation will fall well short of the BoJ's 2%/yr target is unchanged. Japan needs a much more ambitious stimulus program if the 2%/yr inflation target is ever to be met," he said.
"It is a very mild policy change by the BOJ but its policy vector is heading towards tightening. The BOJ's message was to let long-term yields go higher," said Hiroaki Mutou, chief economist at Tokai Tokyo Research Institute.
A CNBC poll of 19 banks and asset managers had found most respondents expected there would be no change to policy. But some experts had predicted the Bank of Japan would tweak its 10-year government bond yield target, amid muted inflation.
Such a move, part of what is referred to as its yield curve control policy, could make banks' profitability improve and possibly lead to higher inflation. Japan had long faced a problem with attaining its goal of inflation at 2 percent, and analysts had expected the central bank would cut its target at this meeting.
"In the end, the BOJ may be simply seeking more flexibility in achieving its inflation goal rather than abandoning its commitment to monetary stimulus. After all, many Asian countries have already adopted inflation target ranges," DBS analysts wrote in a note before the announcement.
The BOJ's policy meeting comes ahead of the Federal Reserve's Federal Open Market Committee's monetary policy meeting on Tuesday U.S. hours, with a decision due on Wednesday from the American central bank.
— Reuters contributed to this report.
WATCH: Don't expect the Bank of Japan to tweak policy: Nomura
