The Bank of Japan held off further easing measures on Wednesday despite struggling to drag up flatlining inflation that is defying a massive stimulus launched two years ago.
The central bank stayed pat on its record easy money programme, which is adding about 80 trillion yen ($663 billion) to the money supply every year.
But economists said BoJ Governor Haruhiko Kuroda will have to boost the scheme, possibly later this month, in a further attempt to bring Japan closer to achieving two-percent inflation.
The BoJ's inflation target is a cornerstone of Prime Minister Shinzo Abe's drive to conquer deflation and revive the long-sluggish economy.
After a two-day meeting, the BoJ said in a statement consumer inflation was likely to be about zero "for the time being" due to lower energy prices.
However, it added "inflation expectations appear to be rising on the whole from a somewhat longer-term perspective".
Kuroda told a press conference that the BoJ board expected price levels will start to rise later this year as general economic conditions improve.
"We believe the rise of the inflation rate will accelerate perhaps after the coming autumn, considering that expected inflation will likely rise over the long run, as the impact of the fall in energy prices diminishes, while the gap between supply and demand continues to improve," Kuroda said.
But he added that the bank stood ready to loosen monetary policy if necessary, recalling his surprise move in October that expanded the scheme earlier than expected.
The yen picked up on the news -- soon after the bank's statement the dollar was at 120.06 yen compared with 120.32 yen in New York on Tuesday.
The US currency slipped to 119.91 in late afternoon.
Kuroda's announcement prompted economists to strengthen their belief that the BoJ will expand the easing programme soon.
The BoJ is likely to lower its growth forecast for the year to March, as the Japanese economy seems to have slowed at the start of the year, said Capital Economics' Marcel Thieliant.
"We still expect policymakers to step up the pace of easing at the end of the month to signal their determination to hit the two percent inflation target," he said.
SMBC Nikko Securities echoed the view and said "further easing is inevitable" as the bank "almost certainly" will not reach its inflation target for the time being.
The Japanese brokerage expected Kuroda to take action sometime between July and October.
"If the US Federal Reserves hikes the rate in September, it becomes possible that the BoJ will expand its easing programme in September to achieve the maximum impact," it said in a note to clients.
Tokyo's campaign to stimulate spending faltered after the government raised the sales tax last year to help pay down the enormous national debt.
That hammered consumers and led to a brief recession, while falling oil prices have hammered energy inflation.
Japan limped out of recession in the last quarter of 2014 with an unimpressive 0.4 percent growth rate.
Kuroda said the negative impact of the consumption tax rise was weakening, while the US economy continues its recovery.
"Japan's economy is expected to continue its moderate recovery trend," with demand both at home and abroad picking up, the bank said.