It is believed that the Bank of Japan will most likely keep the policy steady and hold any further stimulus for the economy until early next year.

Japanese Prime Minister Yoshihiko Noda has already dissolved the country's parliament ahead of an election on December 16, in which the ruling political party is expected to get a poor response from the voters. The central bank is looking to consider the policies of the new government before making decisions.

The BOJ is expected to conclude its two-day meeting on Tuesday without major changes to the policy. Main opposition party leader Shinzo Abe appears to be favoring more fiscal and monetary stimulus and has even asked the central bank to keep the interest rates at zero or even at sub zero levels.

The central bank had earlier said that it will expand its asset purchase programme by 11 trillion yen or about $ 138 billion. BoJ is also offering unlimited loans to banks in the country boost domestic demand and encourage lending. Experts say that the measures would help the economy but the central bank is required to further steps to boost the economic growth.

The demand for credit in the Japanese economy has been affected due to deflation and a high exchange rate. The situation has prevented the country from boosting its domestic consumption in recent years. Falling prices have forced consumer to postpone purchases expecting to get cheaper prices while a high exchange rates have made Japanese goods more expensive for foreign buyers.

The benchmark Japanese government bonds stared the week on a weak note but remained largely stable. The 10-year JGB futures contract ended down 0.08 point at 144.62 on Friday but remained above support at the 5-day moving average of 144.58.