The Bank of Japan began a two-day policy meeting Thursday amid growing speculation that it may cut its key interest rate to prop up the country's flagging economy as the yen keeps rising relative to the dollar.

The BOJ Policy Board meeting comes as the government steps up pressure on the central bank to conduct additional measures to provide liquidity in financial markets and facilitate corporate financing to ward off the fallout from the global credit crunch.

The bank last time cut its target rate for unsecured overnight call money in October to 0.3 percent from 0.5 percent, the first rate reduction in over seven years.