TOKYO (AP) -- Japan's central bank further eased monetary policy Monday in response to a strong yen and growing political pressure to take action on a faltering economic recovery.

The 8-1 decision came during an emergency board meeting called by Bank of Japan Gov. Masaaki Shirakawa. The board voted unanimously to keep the bank's key interest rate at a super-low 0.1 percent.

To boost liquidity, the central bank unveiled a new six-month low-interest loan program to financial institutions. Combined with an existing three-month funds-supplying operation worth 20 trillion yen ($236.4 billion), banks will now have access to a total of 30 trillion yen ($355 billion).

"With this, the bank will encourage a decline in market interest rates and further enhance easy monetary conditions," it said in a statement.

Japan's export-driven economy faces growing uncertainty due to the strong yen and slowing global growth. The Japanese currency hit a fresh 15-year high versus the dollar last week.

Sustained strength the yen is toxic to vital exporters such as Toyota Motor Corp. and Sony Corp. because it erodes their international profits and makes their goods less competitive abroad. In the April-June quarter, Japan lost its place to China as the world's No. 2 economy after posting annualized growth of just 0.4 percent.

The central bank cited mounting worries about the U.S. economy and volatility in foreign exchange and stock markets for its latest steps.

"The bank believes that the monetary easing measure, together with the government's efforts, will be effective in further ensuring Japan's economy recovery," it said.

The loan expansion comes as Prime Minister Naoto Kan prepares a new set of economic stimulus measures. He is expected to meet with Shirakawa before announcing a stimulus framework later Monday.

News of the extraordinary meeting sent Japanese stocks up sharply. The Nikkei 225 stock average advanced 2 percent to 9,172.13 in the afternoon. The dollar rose to 85.43 yen from 85.21 yen late Friday.

Economists, who predicted the central bank's decision, say there may be more to come.

"If the economic outlook and market conditions get worse, the BOJ will likely announce some additional easing measures," said Masaaki Kanno, chief economist at JPMorgan Securities Japan, in a note to clients.

The central bank's next scheduled board meeting begins Sept. 6.