The Bank of Japan on Tuesday maintained its long-standing, ultra-loose monetary policy and offered no guidance on its plans for the new year, sending the yen down against the dollar and boosting stocks.
Speculation had been swirling for weeks that officials would shift away from negative interest rates and tight grip on bond yields as inflation picks up.
That came after governor Kazuo Ueda this month said handling monetary policy would "become even more challenging from the year-end and heading into next year".
While most other major central banks hiked borrowing costs for more than a year in a bid to tame prices, the BoJ has refused to budge as it looked to kickstart the world's number three economy.
After a two-day meeting, the bank said on Tuesday: "With extremely high uncertainties surrounding economies and financial markets at home and abroad, the Bank will patiently continue with monetary easing."
Policymakers have for several months hinted that they are willing to adopt a more normalized policy, such as by making minor tweaks to its yield curve control scheme, which sees the bank control the band within which government bonds are allowed to move.
"We expect…(policy) change is very likely next year," Katsutoshi Inadome, senior strategist at SuMi TRUST, said in a note ahead of the BoJ decision.
"We believe it is likely the BoJ will raise interest rates in 2024" after the central bank gets "a clearer view of forthcoming wage increases" that are regarded as a key factor for achieving its inflation target, he said.
"Looking at the increasing speculation on policy adjustments, January 2024 seems an appropriate time to begin policy modification," he added.
"The bank doesn't want to start hiking at the same time the (United States) begins cutting, so ideally it wants to begin its own policy changes before the US switches its policy."
The Federal Reserve last week voted to hold interest rates at a 22-year high for the third straight meeting but signaled three rate cuts in 2024.
The yen weakened to 143.46 yen after the BoJ announcement, from 142.65 yen in early trade, though the Nikkei 225 index jumped more than one percent in the afternoon.