The world of central banking has gotten a little dull, lately, after a historic 2012. The European Central Bank seems to be in neutral. The Federal Reserve policy seems fairly clear cut. The center of action is Japan, where expectations of more easing (fiscal and monetary) has sent the Nikkei on a rocket ride since mid-November.
The Bank of Japan has started a two-day meeting, and the actual result will come sometime tomorrow. Everyone expects an increase in the inflation goal.
Here's a preview from Nomura:
We expect the Bank of Japan to introduce the two percent inflation target desired by the government. We also expect further easing measures consistent with raising the inflation target from the previous "goal" of one percent. The size of the asset purchase fund could be increased (mainly Japanese Government bonds), or an open-ended scheme could be introduced, scrapping the time limit and ceiling for asset purchases as the Bank of Japan bows to government and market expectations. Prime Minister Shinzo Abe has also mentioned a jobs target and a public-private fund to buy foreign bonds, but we doubt the Bank of Japan will go that far straight away. If it does decide on bolder easing measures, we think it is more likely to increase its "rinban" Japanese Government bonds-buying operations. This would keep in check the level of risk assets on the Bank of Japan's balance sheet and allow it to buy a wider range of Japanese Government bonds. In that case, the Bank of Japan's banknote rule could be temporarily frozen.