TOKYO - The Bank of Japan’s huge new easing measures mark its boldest bid yet to vanquish growth-sapping deflation, but observers warn there are no guarantees of success for the multi-billion-dollar gambit.

The central bank ended weeks of speculation over what its new management team would do last week, unleashing a torrent of measures which rival the US Federal Reserve’s wave of easy money, known as quantitative easing.

Traders lapped up the news, sending Tokyo’s Nikkei 225 index skyward, while bond yields fell to record lows and the yen plunged to levels that heartened Japan’s exporters whose competitiveness depends on a weaker currency.

BoJ Governor Haruhiko Kuroda said his team would double Japan’s money supply by the end of 2014, jack up asset purchases and hit a two-percent inflation target in as many years, vowing no let-up in the battle against falling prices which have plagued the economy for decades.

“We will carry out quantitative and qualitative monetary easing that is unprecedented in its scale and quality,” Kuroda told a packed news conference.

“Rather than doing things incrementally, we are taking all the necessary steps to achieve two percent inflation early,” he added.

Observers hailed it as a “gigantic step” and a “brave new world” with moves that surprised markets used to less aggressive action from Japan’s central bank.

“Kuroda showed today that the Bank of Japan is now different from what it was in the past,” said Yoshikiyo Shimamine, executive chief economist at Dai-ichi Life Research Institute.

Tokyo also applauded the moves with Prime Minister Shinzo Abe—who hand-picked Kuroda and his deputies—saying the market reaction was “exactly what the measures were expected to do”.

Kuroda, meanwhile, brushed off worries his strategy could set off an asset-price bubble, a big fear in Japan after the last two decades of limp growth, which followed a huge stock and real-estate bubble in the late 1980s.

However, even those who lauded the bank’s efforts concede it was a step into uncharted territory, a plan that could backfire and leave Japan saddled with bucketloads of debt and little else.

“We don’t know where this gamble will take us,” said Daisuke Uno, chief market strategist of Sumitomo Mitsui Banking Corp.

Boston University professor William Grimes predicted that the policy “will have positive effects, but there are no guarantees”.

“Deflationary expectations are much more firmly entrenched among Japanese companies and consumers (now). Also, Japan’s fiscal situation has become much worse.

“This means that monetary policy will be (left) on its own, as fiscal stimulus will be modest and temporary,” he added.

Abe’s prescription for the economy includes big government spending, although that too may run into a wall: Japan has, proportionately, the worst debt load among industrialised nations with a rapidly ageing population threatening to exacerbate the problem.

Meanwhile the one-time powerhouse economy has been wrestling with falling prices for years, a deflationary spiral that put the brakes on growth because it encourages people to put off buying goods in the hopes of paying less in the future and hurting producers in the process.

The BoJ said Thursday it would expand its asset-purchase programme to include riskier bets such as exchange-traded funds (ETFs) and real-estate investment trusts. ETFs are similar to an index fund, but are market traded like stocks.

While turning around Japan’s long-tepid economy would assure Kuroda of his place in the history books, some, including London-based Capital Economics warned that the former head of the Asian Development Bank may have set the bar too high.

“The bank won’t help itself in the long run if it makes promises it can’t keep and here, we suspect, doubts will start to creep in,” it said.