The Bank of Japan on Monday began a two-day policy meeting to review its growth and inflation forecasts for moderate economic expansion despite the April consumption tax hike.

Financial market participants also expect the Policy Board to maintain the BOJ's ultraloose monetary policy to encourage growth, including purchasing huge amounts of Japanese government bonds and other financial assets from banks to provide ample liquidity and raise the inflation rate to 2 percent.

In April, the board members projected an average rise of 1.1 to 1.5 percent in real gross domestic product between fiscal 2014 and 2016.