The Bank of Japan set an ambitious 2 percent inflation target and pledged to ease monetary policy "decisively" by introducing open-ended asset purchases, following intense pressure from the country's audacious new prime minister, Shinzo Abe, who has made beating deflation a national priority.

In a joint statement with the government, the central bank said it was doubling its inflation target to 2 percent and said it would "pursue monetary easing and aim to achieve this target at the earliest possible time."

The Bank of Japan also said that it intended to purchase assets indefinitely, promising to stick to a program that has allowed the bank to pump funds into the Japanese economy, even with interest rates at virtually zero. The bank's board voted to keep its benchmark rate at a range of zero to 0.1 percent.