The Bank of Japan eased its ultra-loose monetary policy further on Monday by expanding its asset-buying programme while keeping rates on hold.

KEY POINTS:

-- The BOJ kept interest rates unchanged at a range of zero to 0.1 percent by a unanimous vote.

-- Governor Masaaki Shirakawa will hold a news conference with his comments expected to come out sometime after 4 p.m. (0700 GMT).

COMMENTARY:

NAOKI IIZUKA, SENIOR ECONOMIST, MIZUHO SECURITIES, TOKYO

The economy may develop differently from the BOJ's scenario and there is a possibility that growth may contract in January-March and April-June.

The BOJ responded quickly to the situation by implementing additional easing policies as the economy may be in a phase of entering a recession from the previously view that it was emerging from a lull.

There is a chance that the cost of the damage from the quake could be twice as big as the one caused by the Great Hanshin-Awaji (Kobe) earthquake. Economic activity may slow down toward April-June.

MASAMICHI ADACHI, SENIOR ECONOMIST, JPMORGAN SECURITIES JAPAN

My initial impression is that the BOJ could have done more. Its traditionally reserved stance on policy easing remains in place even after the massive earthquake.

The BOJ also kept its economic assessment unchanged. The bank thus seems to be not fully taking account of strong uncertainty shrouding Japan.

There are some positive aspects, such as its plan to increase ETF purchases. But overall the BOJ action is unlikely to be a positive factor for markets.

BACKGROUND:

-- Early on Monday the BOJ injected a record 7 trillion yen ($85 billion) into the money market, its first same-day market operation since the Greek debt crisis, to soothe market jitters in the wake of a massive quake and tsunami that triggered what could be the world's worst nuclear disaster in 25 years.

-- The bank quickly followed up on its action by infusing an additional 5 trillion yen and offering to purchase 3 trillion yen worth of treasury bills and financing bills.

-- The BOJ eased monetary policy last year by pledging to keep interest rates effectively at zero until the end of deflation was in sight and by crafting a pool of funds to buy assets ranging from government bonds to corporate

-- Japan is battling to prevent a nuclear catastrophe and to care for thousands of people without power or water in its worst crisis since World War Two, after a massive earthquake and tsunami

that are feared to have killed more than 10,000 people.

(Reporting by Rie Ishiguro)

Japan Quantitative easing