* BOJ's policy decision on Tuesday leaves some wanting more
* Yen gains some respite after its recent slide
* Aussie falters as tame inflation offers room for easing
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Jan 23 The yen pushed higher against the dollar on Wednesday after the Bank of Japan's monetary easing announced the previous day fell short of some expectations for faster, more aggressive action.
The BOJ, under intense political pressure to lift Japan out of recession, said on Tuesday it would double its inflation target and switch to an open-ended commitment to buying assets next year.
While the move to end years of economic stagnation was the bank's boldest action yet, it had been widely leaked to the media and fell short of lofty market expectations for an immediate substantial stimulus boost.
"Raising the inflation target was significant but the increase in easing doesn't match the enormity of the challenge," said Gareth Berry, G10 FX strategist for UBS in Singapore.
Under the BOJ's new open-ended pledge, the size of its asset buying scheme is set to increase in 2014 at a pace that will be about a third of the increase planned in 2013 under its existing asset buying programme, Berry said.
The dollar fell 0.5 percent to 88.28 yen. That came on the heels of the dollar's 1.1 percent drop on Tuesday, its biggest one-day fall versus the yen since May.
The greenback, which hit a 2-1/2 year high of 90.25 yen on Monday, is still up about 11 percent compared to a trough hit in mid-November.
A trader for a Japanese bank in Singapore said he was bullish on the yen at the moment, looking for a further corrective bounce in the Japanese currency.
"If dollar/yen does test below 88.00 handle tonight, think 86.80 would be (the) objective," the trader said.
The euro fell 0.6 percent to 117.52 yen, pulling away from a 20-month peak of 120.73 yen reached on Friday.
Still, analysts see the yen weakening over the medium- to longer-term, based on expectations that the BOJ will remain under pressure to inject more stimulus into the economy.
A forthcoming change in BOJ leadership is also seen as likely to weigh on the yen, given expectations for Prime Minister Shinzo Abe to appoint a policy dove to replace BOJ Governor Masaaki Shirakawa, whose term ends in April.
"The initial flurry of disappointment reflects the fact that so much anticipation surrounded the announcement, and the fact that in the very short term, this policy move changes little," said Kit Juckes, strategist at Societe Generale.
"Japan, like Oliver Twist, has been fed on a diet of thin gruel for a long time. However, I continue to believe that this move is consistent with the shift in attitude and in the direction of policy, which will deliver a higher USD/JPY level over the coming year, and an overshoot above 100 in due course."
The Australian dollar fell 0.3 percent to $1.0540 after a surprisingly benign inflation reading suggested there was still plenty of scope for further interest rate cuts by Australia's central bank, though investors still doubt a move will come next month.
The euro slipped 0.1 percent to $1.3309.