Bank of Japan’s Critical Meeting December 19-20

Prime Minister Abe returned to power after Sunday’s landslide victory. The past three years have lead Japan into severe economic problems including controversy with a top trading partner, China.

The Bank of Japan has their first meeting since the Abe victory and the world is waiting to hear their reaction to Abe’s vision for the BOJ (Bank of Japan). Shinzo Abe and the Liberal Democratic Party are ready to push for radical stimulus measures and more money printing.

Bank of Japan governor Masaaki Shirakawa’s term ends in April. If the next governor is on the exact same wave length as Prime Minister Abe, we could see exponential amounts of easing. 14 out of 19 economists asked by Reuters last week are looking for the BOJ to increase easing this week again by up to ten trillion yen. Japan’s asset buying and lending program is already around 91 trillion yen which is equivalent to about 1 trillion U.S. Dollars.

How the Bank of Japan responds to Abe’s desire of stimulate the economy with more easing could contribute greatly to many investor’s and economist’s Japanese outlook for 2013.

The Yen is currently very weak and could continue to be as tomorrow’s Press Conference statements unfold. The EUR/JPY is hitting yearly highs and could very well continue in a bullish direction with the fiscal cliff approaching and Japanese monetary policy being established.

December is usually a calm period for the market’s but 2012 is becoming quite the exception.

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