Reuters reports that Bank of Japan Governor Haruhiko Kuroda said the central bank is already buying exchange-traded funds (ETF) flexibly, but will seek ways to make the programme more effective and sustainable in a scheduled review of its policy tools in March.

Kuroda said the BOJ is mindful of the need to address the side-effects of its massive stimulus, adding that he was aware of criticism its ETF purchases were distorting stock prices.

"We're already buying ETFs in a nimble and flexible manner," Kuroda told parliament on Wednesday.

"The BOJ's various tools, including its ETF buying, will be the target of the March review," he said. "We'll examine how our tools are affecting markets and look at what we can do better."

The BOJ will conduct a review of its policy tools in March to make them more sustainable, as the COVID-19 pandemic heightens the chance of a prolonged battle to reflate growth.