FXStreet (Mumbai) - The Bank of Japan had not looked very keen on easing. Markets had broadly speculated the central bank to sit pat. Policy makers, it seemed wanted to wait and watch before adding on to the already massive asset purchase programme. However, with inflation far below the BPJ’s 2 per cent inflation target and companies reluctant to raise capital expenditure the need for additional easing could not be discounted. Consumer inflation was just 0.1 per cent year on year in December and this had raised the call for further easing. Also, Tokyo stocks were on a decline. Hence there was pressure on the central bank to act. However, it was felt that the BOJ will wait till April before easing further given that it is assumed expectation for loose monetary policy will heighten ahead of the elections in June. Governor Haruhiko Kuroda said last week that the BOJ was not planning to adopt negative interest rate policy any time soon. He had also told the Japanese parliament that if at all there is further easing it would an expansion of the massive asset-buying program. Therefore when BOJ announced a cut in benchmark interest rate below zero markets were taken aback. It stunned investors. The objective of the central bank is to boost growth amidst slowing global growth. The central bank raised expectations for more easing with its statement "The BOJ will cut the interest rate further into negative territory if judged as necessary”. The BOJ's policy board in a 5-4 vote decided to charge a 0.1 per cent interest on current accounts which financial institutions hold. The central bank stated that the objective of the negative interest rate was to help Japan deal with the turbulence seen currently in the markets which policy makers believed was hurting business confidence. The central bank is desperate to revive the "deflationary mindset" which it is striving to combat with its aggressive QQE programme. The BOJ however continued to maintain that it will expand base money at an annual pace of 80 trillion yen ($675 billion) through aggressive purchases of JGBs and risky assets. Post the announcement Asian shares saw considerable improvement. The yen fell and sovereign bonds rallied after the BOJ announced its decision to charge more for excess reserves parked with it, a measure is championed by the ECB. Inflation outlook lowered The BOJ today cut its core consumer inflation forecast for the coming fiscal year beginning in April to 0.8 per cent, lower than the 1.4 per cent inflation rate projected three months ago. It now expects consumer inflation to move up to 1.8 per cent in the fiscal year ending in March 2018. The BOJ’s surprise move follows an extremely poor data that showed household spending and output slumped in December, highlighting all over again Japan's weak economic recovery. Analysts are of the opinion that the BOJ was almost forced to choose negative interest rate as an easing tool as it is fast running out of assets to buy and hence expanding its asset buying programme further did not seem to the policy makers as a viable option. Daiju Aoki, an economist at UBS Securities in Tokyo said via Reuters "This shows that the ability to buy more JGBs is limited." For more information, read our latest forex news.