The Bank of Japan kicks off its two-day policy meeting on Tuesday. Attention is focused on whether the central bank will further adjust its ultra-easy monetary policy aimed at stimulating the economy.

The BOJ shifted its stance slightly last month by raising the cap on long-term interest rates. Officials at this meeting are expected to discuss the effects on financial markets and the economy.

The BOJ's December decision allowed long-term rates to rise to about 0.5 percent. It said the aim was to correct market distortions resulting from the massive easing program.

Upward pressure on long-term rates has been building. That's because market participants think the BOJ will tweak policy again to let rates rise further.

But the central bank has been trying to hold the line by buying large amounts of government bonds.

Attention is also focused on the bank's outlook for consumer inflation over the next two fiscal years. The question is whether policymakers will raise their forecast from the previous one in October for a 1.6 percent increase in prices.

BOJ officials have said the gains in the current fiscal year are due to soaring costs of raw materials and a weaker yen. They expect inflation to gradually slow.

Analysts are watching to see if the outlook comes close to the BOJ's inflation target of 2 percent. Businesses in industries other than food and energy have also been raising prices.