People walk out from the Bank of Japan headquarters in Tokyo.

The Bank of Japan on Tuesday adopted a two percent inflation target demanded by the country's new government while also launching an open-ended easing policy aimed at boosting the economy.

“The bank sets the 'price stability target' at two percent in terms of the year-on-year rate of change in the consumer price index,” the BoJ said in a statement.

“The Bank will pursue aggressive monetary easing ... through a virtually zero interest rate policy and purchases of financial assets,” it added.

“With respect to the Asset Purchase Program, the Bank will introduce a method of purchasing a certain amount of financial assets every month without setting any termination date,” it said.

Japan's new government, led by the hawkish Shinzo Abe, swept to power last month on a pledge to fix the economy with big spending and pressure the BoJ into aggressive action to kickstart the world's third-largest economy.

The BoJ's announcement of the inflation target was set out in a rare joint statement with the government.

Also Tuesday, the BoJ lifted its growth forecast for the country's economy, predicting gross domestic product would expand by 2.3 percent in the year ended March 2014, up from an earlier 1.6 percent estimate. - Sapa-AFP