Japanese stocks were down in volatile trade for Asian markets as investors nervously waited on the outcome of the Bank of Japan's policy meeting amid growing speculation the central bank might step up its efforts to boost inflation.

While the BOJ is expected to make negative interest rates the centerpiece of a new policy framework, analysts are divided on what new measures it will unveil even as it grapples with concerns that it is reaching the limits of its unconventional policy making.

Ahead of the decision, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was flat, perched at its highest levels since Sept. 12. Markets in Hong Kong .HSI and Japan .N225 led early losers. Tokyo's Nikkei was off 0.5 percent.

"We expect the BOJ to step up its support for pushing inflation to 2 percent," BofaML strategists wrote in a preview note. "A combination of policy innovations designed to sharpen monetary accommodation and bolster BOJ credibility is most likely, in our view"

With three years of massive money printing failing to push up inflation, the BOJ is expected to move away from the shock therapy of massive stimulus toward a more protracted battle against deflation, say sources familiar with its thinking.

Spreads between 20 year JP20YTN=JBTC and 2 year Japanese debt JP2YTN=JBTC have steadily narrowed in recent years and collapsed to its lowest levels on record in late July before widening slightly to 64 basis points.

Wary of a flattening yield curve that risks impairing financial intermediation, it will also seek ways to steepen the curve such as making its bond buying more flexible

Markets are also watching out for the US Federal Reserve policy decision, due later in the global day. Both hawkish and dovish comments from Fed officials recently have stoked volatility in financial markets, although consensus is now centered on a US rate hike by year-end.

While expectations of further action from the BOJ has increased after it promised a "comprehensive assessment" of its policy settings and as the economy has slipped back into deflation, some are expecting no change to existing policy.

"Bolder, more aggressive, action is needed to put a top in the yen and a bottom in USD/JPY but the chance of that happening is slim and we believe that at the end of the BOJ meeting, investors will be disappointed," Kathy Lien, managing director at BK Asset Management, said in a note.

US stocks ended little changed, with healthcare .SPXHC gains offsetting declines in energy .SPNY

The Dow Jones industrial average .DJI added 0.05 percent, the S&P 500 .SPX gained 0.03 percent, and the Nasdaq Composite .IXIC rose 0.12 percent.

In bond markets, US Treasury yields were supported in early trade as investors bought longer-dated bonds on uncertainty over the outcome of the BOJ meeting.

Benchmark 10-year Treasury notes US10YT=RR were trading at 1.69 percent, a shade higher from Tuesday's level. Japanese and Australian government bond yields crept lower as investors flocked to safe-havens before the decision.

Currency markets held tight in recent trading ranges with a broad dollar index .DXY, a basket of trade-weighted currencies, holding steady at 95.97. The euro was steady at $1.11530 EUR=, while the dollar weakened slightly against the yen at 101.57 yen JPY=.

The Australian dollar AUD=D3 consolidated chunky recent gains at $0.7552 as the demand outlook for industrial metals for China continued to improve along with favorable tailwinds from emerging markets and currencies. It is up 1.5 percent in a week.

Oil prices were up in early Asian trade with U.S. crude oil futures CLc1 up 1.8 percent to $44.83 per barrel. [O/R]