The Bank of Japan unveiled fresh easing measures Thursday, sending the yen plunging after the central bank's first policy meeting under a new leader who has vowed to turn around the stuttering economy.

The closely watched announcement was welcomed by as a "positive surprise" by investors, who had been concerned new governor Haruhiko Kuroda would fall short of expectations after promising to reverse decades of deflation and limp growth.

After a two-day meeting the central bank said it would embark on an aggressive spending program, boosting asset purchases including Japanese government bonds, while pledging to meet a two percent inflation target within two years.

The moves would see the BoJ "enter a new phase of monetary easing both in terms of quantity and quality", it said in statement.

Among its purchases will be exchange-traded funds (ETFs) and longer-term bonds, with the latter aimed at pushing down long-term interest rates to encourage companies and individuals to borrow.

ETFs are similar to an index fund, but trade on the market like stocks.

The bank also pointed to an uptick in Japan's economy, which has suffered a mixed bag of data lately without any clear sign of a firm recovery.

"Japan's economy has stopped weakening and has shown some signs of picking up," the BoJ said.

The news out of Tokyo sent the dollar surging against the yen, providing a boost to Japan's exporters who have been struggling under the weight of a strong currency.

In afternoon forex trade, the dollar surged as high as 94.33 yen after the announcement, from 92.94 earlier in the day, while the euro also jumped to 120.84 yen from 119.39 yen.

Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, called the news a "positive surprise" for markets.

The weakening yen also sent shares up 0.80 percent, after sinking almost two percent earlier in the day.

Speculation over the meeting's outcome has been building, with analysts warning the new-look BoJ may have set an unrealistically high bar and that any new measures Thursday may disappoint.

Kuroda, who took over at the BoJ last month, has been talking up his plans for a renewed assault on the deflation that has plagued the world's third-largest economy for years.

The finance veteran has in the past criticised his predecessors for being too timid in trying to reverse the falling prices that have crimped private spending and corporate investment, and calling Japan's long-running deflation "abnormal.”

Ahead of this week's meeting, Kuroda told parliament that he planned to live up to market expectations for "bold" monetary easing.

The finance veteran and his two new deputies were hand picked by Prime Minister Shinzo Abe who has pledged to boost the nation's limp economy, and publicly criticized the BoJ's previous management team. (AFP)