Japan's central bank has surprised markets by adjusting its monetary policy, allowing long-term interest rates to fluctuate in a wider band. The Bank of Japan believes the new range will improve market functions.

Policymakers wrapped up their two-day meeting on Tuesday.

The yield for the 10-year Japanese Government Bond will now be allowed to move in a range of around plus and minus 0.5 percent. The earlier range was plus and minus 0.25 percent.

Their decision came amid pressure for the BOJ to join other central banks in raising interest rates.

The BOJ says it will maintain its easy-money environment by boosting its monthly purchases of long-term government bonds for the January-to-March period from 7.3 trillion yen, or about 54 billion dollars, to nine trillion yen, or about 67 billion dollars.

The lifting of the ceiling for the long-term rate to about half a percent is seen as an attempt to respond more flexibly to market movements.

The central bank says the previous range was too narrow, posing problems to market functions.

Board members are keeping the short-term interest rate unchanged in negative territory.