"It does increase the risk of other countries taking similar moves in what they perceive as a currency war," he said.
In its announcement, the Bank of Japan said it plans to buy more than $530 billion a year in government bonds. BOJ governor Haruhiko Kuroda described the scale of monetary stimulus as "large beyond reason," but said the inflation target would remain out of reach if the central bank stuck to incremental steps.
"We'll adjust without hesitation if need be, while monitoring economic and price conditions," he said.
The Bank of Japan said it intends to "drastically change the expectations of markets and economic entities."
Since taking power late last year, Prime Minister Shinzo Abe's administration has pursued an aggressive stimulus program of government spending, monetary easing and planned reforms aimed at improving Japan's competitiveness.
On Thursday, Japanese stocks jumped and the yen sank after the central bank's announcement. The yen weakened 3 percent against the dollar, to 95.94 yen, while Tokyo's Nikkei stock index rose 2.2 percent to 12,634.54.
U.S.-listed shares of Japanese automakers rose sharply, reflecting the belief that a weaker yen would make Japanese vehicles cheaper in markets outside Japan. The U.S. shares of Toyota rose $4.43, or 4.4 percent, to $105.31, Honda's rose $1.93, or 5.2 percent, to $39.13 and the Nissan's rose 84 cents, 4.5 percent, to $19.66.
"By committing today to meet a 2 percent inflation target in two years, Gov. Kuroda can justifiably claim to have set the Bank of Japan on a new path," said Mark Williams of Capital Economics.
Kuroda has vowed to do what he must to meet the inflation target within two years. Thursday's decision after a two-day policy meeting makes that central bank policy.
Politically, the policy shift is a coup for Abe, whose Liberal Democratic Party needs to make headway in reviving the economy before an upper house parliamentary election in July. The LDP is hoping for a strong-enough mandate to push ahead with other items on their wish list, such as politically difficult economic and educational reforms and changes to the constitution to give Japan's military a higher profile.