Indeed, much has happened since September—the yen has lost 15 percent against the greenback, the benchmark Nikkei equity index and Japanese government bond (JGB) yields have spiked, future U.S. economic policy looks shaky under President-elect Donald Trump, the Federal Reserve has raised interest rates for the second time in a decade and predicted three more hikes next year.
Instead of tinkering with rates, the focus of Governor Haruhiko Kuroda's afternoon press conference will likely be on JGBs and the bank's economic outlook.
"The world will be specifically watching whether the zero percent yield anchor for 10-year JGBs is a hard and fast line in the sand, and if so, whether the BOJ will unequivocally commit to JGB purchases to that end," Mizuho Bank said in a note on Monday.
"It could also discuss at the meeting to implement the fixed rate outright purchase, a new tool introduced in September to contain rise in JGB yields," said Kowhai Iwahara, economist at Natixis Japan Securities.
On Sept 21, the BOJ said it would make yield-curve control a centerpiece of its new policy framework. It would buy 10-year JGBs so that the yield would hover around zero percent while keeping a lid on short-term rates. Additionally, the central bank abandoned its target for expanding the monetary base.
Meanwhile, the BOJ could also upgrade its economic assessment on Tuesday following a string of positive data.
The yen's decline has helped November export volumes, which hit a two-year high according to data released Monday, and brightened the outlook for manufacturers, as revealed by the central bank's December Tankan survey last week.
While inflation remains well below the government's 2 percent target, the outlook has significantly improved.