But pundits were hard put to predict what method the central bank's policy board would deploy to achieve that goal, since interest rates are already at zero and the bank has said it doubts whether extra liquidity would help the economy.

The BoJ has come under increasing pressure to act on the monetary front since its repeated solo currency market interventions failed to keep the yen from skyrocketing to 103.20 yen to the dollar last week -- its highest since December 1995.

The yen's surge was sparked by an inflow of foreign money that flooded into Japan on hopes that an economic recovery was finally around the corner.

But authorities now fear that if left unchecked, the currency's rise could stop that nascent recovery in its tracks.

So now some politicians and finance officials want the BoJ to ease credit further to dampen bullishsentiment for the yen, give an extra fillip to the economy and help persuade Washington to join in dollar-buying intervention to cap the yen's rise.

Finance minister Kiichi Miyzawa summoned the cental bank governor Masaru Hayami to a rare and high-profile meeting last Thursday that left the strong impression of arm-twisting for further monetary easing.

Hayami, speaking to reporters afterwards, showed no sign of budging and insisted the BoJ was doing "more than enough" by pumping suifficient funds into the Tokyo money market to drive short-term rates virtually to zero.

With short-term interest rates already at around zero since last February and an official discount rate at a record low 0.5 per cent for the past four years, the BOJ will have to select from a list of more arcane ways of increasing liquidity.

The central bank has repeatedly said it opposes one idea favoured by some economists -- an "unsterilised" currency intervention in which it would leave the yen it sells in the market rather thansoaking it up through its daily money market operations.

"Unsterilised intervention would be good, (as it would) increase the monetary base, and with it... an inflation target. Hopefully, that would also encourage the other major central banks to help Japan out," said Russell Jones, chief economist at Lehman Brothers in Tokyo.

The BoJ's public rejection of unsterilised intervention means the central bank is likely to seek other ways of achieving a similar result without losing face, analysts said.

Many analysts said the simplest way to inject more yen into the market would be to increase the daily fund surplus from the current one trillion yen ($9.26 billion) through the BoJ's daily money market operations.

"If they leave a (bigger) surplus, it's essentially the same as unsterilised intervention," said Brian Rose, chief economist at Warburg Dillon Read.

The central bank could also expand the types of bonds it buys to include medium-term instruments as well as the long-term bonds it now buys, orboost the amount of its bond repurchase operations, bond traders said.

Japanese government bonds gained solidly on Monday amid expectations for further monetary easing.

The yield of the 215th 10-year JGB was at 1.65 per cent in late Monday Tokyo, compared with 1.705 per cent on Friday. Analysts said, however, that the impact of further monetary easing was largely likely to be psychological.

"I'm sympathetic to the Bank of Japan...there is a liquidity trap that is not going to be solved by moving the price of money to zero," said Ron Bevacqua, chief economist at Commerz Securities in Tokyo.

"But monetary stimulus seems to be necessary to change market perceptions and drive the yen to lower levels," he added.

In the currency market, the yen found itself on the defensiveon Monday in a market rife with speculation that the United States might join Japan to sell yen for dollars on condition that Japan undertook a substantive easing in monetary and fiscal policy.

The dollar was at around 107.58 yen lateon Monday in Tokyo, compared with 107.05/15 yen in New York late on Friday.

The BoJ might also simply hang fire and say it is still studying its options, but in that case, analysts predicted that the yen might surge beyond the 100 level.