Amid speculation the Bank of Japan will announce additional monetary easing next week, some observers are warning of possible side effects.

A long way from hitting its 2 percent inflation goal, the BOJ may expand its radical negative interest rate policy and modify its asset-purchasing program in a bid to galvanize domestic demand by driving down lending rates, said sources familiar with the bank's thinking.

But economists have warned that these steps risk disturbing the normal functioning of the economy and the financial system, as the BOJ has already eased its monetary grip to unprecedented levels since Gov. Haruhiko Kuroda took office in March 2013.