While only time will tell whether Japan's incoming Prime Minister Shinzo Abe wins the war he has declared against deflation, one thing is clear, say analysts, the central bank will be pushed to be far more aggressive than it has ever been.
"They (Abe and his Liberal Democratic Party) have all the power that they want," Nicholas Smith, director and strategist with CLSA in Tokyo said after the opposition LDP's
"He's talking aggressive monetary policy, fiscal policy and a weakening of the yen. The important thing is not whether they will execute and whether they will be able to execute, but just how far they will go with this. I think we should be frightened about how much they do, rather than how little," Smith added.
The Bank of Japan (BOJ) has so far eased policy four times this year by expanding its asset buying program, which currently stands at 91 trillion yen ($1.1 trillion), but these measures have been ineffective in boosting the economy struggling with recession, reversing deflation and weakening the yen.
(Read More: Aggressive Easing Wrong Medicine for Japan: Roach)
In his election campaign Abe, who will be serving as prime minister for the second time after leaving office 5 years ago, pledged to pressure the BOJ to ease more aggressively in a bid to inject new life into the world's third-largest economy. Abe is aiming for a higher inflation target of 2 percent instead of the current 1 percent goal set by the BOJ.
In the month before the December 16 elections Abe's comments have lifted investor sentiment, with the Nikkei up more than 12 percent. Talk of aggressive easing also saw the safe-haven yen shed 5 percent against the U.S. dollar.
On Monday, a day after the LDP surged to power winning a majority in Japan's lower house of parliament, Japanese shares hit an eight and a half month high, while the yen touched a 20-month low.