While remaining cautious about further monetary easing, the Bank of Japan will carefully assess economic conditions at its two-day policy meeting starting Wednesday to determine whether fresh measures are needed, according to analysts and other sources.

The prevailing view in the central bank is to hold off from additional easing this time around, as China's economy appears to have bottomed out and there are signs of improvement in the United States.

But the BOJ's latest "tankan" quarterly survey on business sentiment, released Friday, showed major nonmanufacturers expect confidence to deteriorate over the next three months, although large manufacturers are slightly more optimistic.

Given this outcome, the BOJ could consider further monetary easing to prevent its hopes of reviving the economy as early as fiscal 2013 from being derailed, the sources said.

In addition, the dispute with China over the Senkaku Islands has badly affected Japanese exporters, and the adverse impact has spread to other sectors. As for the U.S., the outlook remains unclear for a deal to avert the looming "fiscal cliff" of tax increases and spending cuts.

The BOJ's upcoming Policy Board meeting may discuss whether to change policy, as some members insisted on emphasizing its commitment to monetary easing at the board's Oct. 30 meeting.

Those members proposed that the central bank amend the wording describing its position to pledge that policy easing will be pursued until the BOJ judges that a 1 percent year-on-year rise in the consumer price index has been achieved. The BOJ currently states it will pursue easing until it judges that the 1 percent inflation goal is in sight.

The bank decided to effectively introduce an inflation goal of 1 percent in February, along with what it called a "price stability goal in the medium to long term" for an increase of up to 2 percent.