Shares in Asia rose Wednesday on the news that Japan's central bank would ease off of its aggressive money printing policy of the past years and instead focus on interest rates in an attempt to boost inflation and rekindle economic growth.

"The Bank will pursue and achieve the price stability target of 2 percent at the earliest possible time," it said in a statement.

The Nikkei ended 1.9 percent higher after the Bank of Japan (BOJ) announced the overhaul of its previous strategy, which had done little to boost the world's third-largest economy.

Hong Kong's Hang Seng index rose 0.6 percent, while the China Enterprises Index gained 1.0 percent after the bank announced its decision at the end of the two-day rate review.

Uncertain outlook

The BOJ's announcement came hours before the Organization for Economic Co-operation and Development lowered its 2016 growth forecast for Japan to 0.6 percent from 0.7 percent. But the OECD predicted a rosier outlook for 2017, expecting growth of 0.7 percent instead of its previous estimate of 0.4 percent.

The new policy of quantitative and qualitative monetary easing (QQE) with yield curve control (YCC) would not require deeper negative interest rates or greater bond purchases, the bank said.

It will continue to buy long-term government bonds at a pace of around 80 trillion yen (700 billion euros) per year, to keep 10-year bond yields at current levels around zero percent.

The current 0.1 percent negative interest rate will continue to apply to some of the excess reserves that financial institutions park with the central bank.

"The Bank believes that its monetary policy and the government's fiscal policy as well as initiatives for strengthening Japan's growth potential will produce synergy effects, and thereby will navigate Japan's economy toward overcoming deflation and achieving sustainable growth," it said.

New policy, new worries

Some analysts doubted whether the move would have a lasting positive impact on financial markets.

"The impression is that the BOJ is starting to pull back some of its troops from the battlefront," said Katsutoshi Inadome, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities. "The markets could now begin testing the BOJ's commitment to its price target in the next few months."

Kuroda said directly targetting interest rates could work more effectively to raise inflation expectations than focusing on base money.

"It's very effective in the long-term perspective. But in the short term, there isn't a clear link between the base money target and inflation expectations," Kuroda told a news conference. "That's why the new policy framework can respond to changes in the economy and prices more flexibly."

sgb/pad (AP, AFP, Reuters, BOJ)