The Bank of Japan expanded its asset purchases by 11 trillion yen $138 billion (£86.093 billion) on Tuesday, easing monetary policy for the second straight month amid heightened pressure for bolder action to fight deflation and support an economy on the cusp of recession.

The central bank also decided to create a new scheme to offer cheap long-term funds to banks, setting no cap on the total amount to be offered.

The central bank pledged to pump 91 trillion yen through its asset buying and lending programme, its key monetary easing tool, with 10 trillion yen set aside for buying government bonds. The remaining 1 trillion yen will be for purchases of commercial paper, corporate bonds, ETFs and real estate investment trusts (REITs).

As widely expected, it kept its overnight call rate target unchanged at a range of zero to 0.1 percent by a unanimous vote.

The BOJ will release its twice-yearly economic outlook report at 3:30 p.m. (6.30 a.m. British time), when it is set to cut its growth forecasts and push back the timing for hitting its inflation target. Governor Masaaki Shirakawa will hold a news conference from 3:45 p.m. (6.45 a.m. British time).

The BOJ set a 1 percent inflation target and eased policy via an increase in its asset-buying and loan programme in February. It expanded the scheme again in April and September to ease the pain from a strong yen and slowing global growth.

($1 = 79.8150 Japanese yen)

(Reporting by Leika Kihara and Stanley White; Editing by Chris Gallagher)