The shorter-end of the yield curve is benefiting most from the BOJ's move to spend an extra 10 trillion yen ($127.57 billion) on buying JGBs as part of its asset-buying programme, as the central bank only purchases bonds with up to two years left to maturity.

The two-year yield fell a basis point to 0.105 percent , while the five-year yield dropped a basis point and a half to 0.310 percent, a three-month low.

"There's only so far the two-year can fall," said a fund manager at a Japanese life insurance company.

The two-year yield is highly unlikely to ever trade below the BOJ's overnight call rate target, set between zero and 0.1 percent since October 2010, strategists said.

The yield on 10-year JGBs lost a basis point and a half to 0.950 percent, moving closer to a 14-month low of 0.935 percent hit last month.

Ten-year JGB futures rose 0.23 point to 142.79, after briefly spiking as high as 143.37 on Tuesday after the BOJ's announcement, their highest level since November 2010.

Longer durations sat out the rally. The 30-year yield was flat at 1.935 percent and the 20-year yield was also unchanged at 1.740 percent.