The Bank of Japan surprised markets Friday by deciding to expand the scope of its asset purchase program in a move to enhance its already massive monetary easing to keep the nation's fragile economic recovery on track.

The central bank will set up a new program to increase its purchase of exchange-traded funds by around ¥300 billion ($2.5 billion) annually, in addition to the current program to buy at an annual pace of about ¥3 trillion.

The BOJ will also extend the average maturity of its Japanese government bond holdings to seven to 12 years from next year from the current seven to 10 years, in a bid to lower long-term interest rates and help companies raise funds.