Reuters reports that Bank of Japan Deputy Governor Masazumi Wakatabe said that the Bank of Japan must be ready to cut interest rates further and keep exploring ways to battle economic shocks.

Wakatabe said the BOJ's policy review in March won't lead to a withdrawal of monetary stimulus, but will focus on making its tools "sustainable, effective and nimble".

The key would be to ensure the central bank has sufficient ammunition to combat any future shock to the economy, such as one triggered by the coronavirus pandemic, he added.

"The BOJ must guide policy in a way that ensures real interest rates don't spike abruptly," Wakatabe told.

"We must also maintain our commitment to achieve 2% inflation. Based on the commitment, we'll be ready to lower nominal rates as needed," he said.