The Bank of Japan said Friday it had decided to provide further monetary easing steps to prop up the world's third-largest economy amid stagnant domestic spending.

As part of the measures, the central bank is doubling purchases of exchange-traded funds (ETS) to 6 trillion yen ($57.7 billion, 52.09 billion euros) from 3.3 trillion yen, it said in a statement released after a two-day monetary policy meeting.

The move comes amid growing pressure from Prime Minister Shinzo Abe's government on the bank to match his stimulus plans with more monetary easing.

However, the bank's announcement disappointed investors who had been expecting the BOJ to take more aggressive measures, and Tokyo's Nikkei 225 stock index dived 1.8 percent soon after the bank issued its statement.

"The BOJ did not live up to expectations. I want to hear what BOJ Governor Haruhiko Kuroda has to say, but increasing ETF purchases makes no contribution to achieving 2-percent inflation," Norio Miyagawa, senior economist at Mizuho Securities, told the Reuters news agency.

"The BOJ won't admit it, but it has reached the limits of quantitative easing and negative rates."

Growth forecast down

The BOJ also said it will conduct a thorough assessment of the effects of negative interest rates and its massive asset-buying program, suggesting that a major overhaul of its stimulus program may be forthcoming.

But it decided to leave unchanged the negative interest rate policy of imposing a 0.1-percent penalty on some of the reserves held by financial institutions.

Furthermore, the central bank slashed its economic growth forecast for the current financial year amid concerns about rising yen, slow growth in China and possible negative impact from Britain's decision to leave the European Union.

The bank expected the Japanese economy to expand 1 percent in the year through March 2017, revised down from the April estimate of 1.2-percent growth.

It also predicted Japan's consumer price index would inch up just 0.1 percent for the year, down sharply from the 0.5 percent predicted three months ago, and far below the 2-percent target it set in April 2013.

The BOJ's move comes after Abe said Wednesday his government would compile a stimulus package worth more than 28 trillion yen ($265 billion, 241 billion euros) to get the ailing economy on its feet again.

The package included direct fiscal measures such as boosting spending by national and local governments as well as loan programs.

sri/hg (dpa, Reuters, AFP)