Japan's central bank opted yesterday to keep its monetary easing strategy mostly as is, while tweaking its asset purchases to push yields on long-term government bonds higher. The technical adjustments to the Bank of Japan's policies were widely expected, though many analysts had expected an interest rate cut or other more aggressive moves to perk up sluggish growth in the world's No. 3 economy. The meeting wrapped up just hours before the U.S. Federal Reserve's latest policy decision was due. Economists expect the Fed to leave rates unchanged when it ends its two-day meeting yesterday.The Bank of Japan's policy statement said its short-term policy rate will remain at negative 0.1 percent. The central bank is charging that rate on excess reserves it holds for banks to encourage them to lend more and said it might cut it further.The tinkering with policy highlights the limits of the central bank's options but may alleviate concern the BoJ is "crowding out" other investors with its massive purchases of government bonds. Pushing yields on longer-term securities higher will be a boon to life insurers and other big institutional investors that have seen investment returns plunge after the BoJ imposed its negative interest rate policy in February. In reaction to the BoJ decision the benchmark Nikkei 225 index jumped 1.9 percent Wednesday, to 16,807.62. Hong Kong stocks rose yesterday too as Asian markets were cheered by the BoJ'sdecision to overhaul its policy framework. The market has also been bolstered by strong Chinese money inflows.The Hang Seng index rose 0.6 percent to 23,669.90 points, while the China Enterprises Index gained 1.0 percent to 9,849.06.In addition, the yen fell yesterday right after the Bank of Japan altered its policy framework and pledged to keep rates lower for longer to generate inflation ahead of the outcome of the Federal Reserve's policy meeting. "The BoJ has come as close to an open-ended commitment to do what it takes to achieve its inflation target. We think this is a valiant attempt but we remain sceptical," said Mazen Issa, senior currency strategist at TD Securities, speaking to Reuters. "Dollar/yen staged a mini-rally but stalled near key resistance around the 102.80/103.05 area. We would neutralize longs ahead of the Fed decision."The dollar which rose more than 1 percent to a one-week high of 102.79 yen gave up some of its gains in the European session to trade at 102.05 yen after BoJ Governor Haruhiko Kuroda said the Japanese economy was no longer in deflation.The euro which had surged to 114.36 yen was trading at 113.75, still up 0.4 percent on the day. Traders said the fact that BoJ was taking action to boost inflation was a surprise to many who had doubts over the central bank had much left in its arsenal.On the other hand, the central bank said it will continue its asset purchases at a rate of about 80 trillion yen ($787 billion) a year.The "new framework" to strengthen monetary easing also commits the Bank of Japan to pushing past the 2 percent inflation target it set more than three years ago.In a 61-page assessment, the BoJ said its "quantitative and qualitative easing," monetary policy, known as QQE, had succeeded in ending deflation, or falling prices. But it said that fostering the scale of "inflation expectations" that might encourage consumers and businesses to spend more was taking time. "With regard to the outlook, sluggishness is expected to remain in exports and production for some time, and the pace of economic recovery is likely to remain slow," it said.Analysts expect the BoJ to eventually slash its policy rate further. "With underlying inflation set to fall to zero in coming months, we expect the policy rate to eventually fall to minus 0.4 percent," Marcel Thieliant of Capital Economics said in a commentary.The world's other major central banks have spent years struggling to rejuvenate their economies, to raise inflation and get businesses and consumers to spend more.