Bank of Japan meets this. As the BOJ just made modifications to the composition of asset purchases in December2015 and needs some time to review the effects, further policy actions are not expected to be taken at this Friday meeting. But expectations are high that the BOJ may strike a dovish tone to signal further stimulus, given that the JPY has appreciated and oil prices have declined compared to a month ago. Board members are widely expected to lower their FY2016 inflation estimate, and push back the timeline for achieving the 2% price target. 

The recent appreciation of the yen is negligible compared to its 50% drop in 2013-15. At the present level of 118, the USD/JPY rate is not far from the 119 predicted by Japanese corporates in the 4Q15 Tankan survey. The JPY's fluctuations were mainly caused by the volatile risk sentiment in global financial markets. The BOJ is unlikely to react to a temporary period of JPY strength, unless a stronger yen becomes the trend - resulting in a persistent decline in imports prices and a fall in inflation expectations. 

The oil prices are a bigger risk. Crude price had fallen by 20% since the start of this year (before the rebound last Friday), driven by not only the sentiment factors, but also the fact that global oil supply continues to outstrip demand. While cheaper oil should eventually benefit energy importing economies like Japan, the immediate impact is that downward price pressures will increase and the central bank's inflation target will become more elusive. The collapse of oil prices in 2H14 (about 50%) had prompted the BOJ to expand the size of QQE by JPY 10trn. This time, the BOJ should also pay close attention to the movement in oil prices to judge whether it will have lasting impact on inflation and inflation expectations. 

The Japanese corporate sector has lowered its expectation for output prices thanks to cheaper oil costs. But households' inflation expectations have remained fairly steady, according to the BOJ's latest opinion survey released last week. Meanwhile, the upcoming data this week will likely show that the core CPI less energy and food has remained stable as of Dec15, at 0.9% (YoY). At the current juncture, it appears that there is no urgency for the BOJ to further ease policy to bolster the prices trend. But if oil prices were to fall again, the chances of easing at April's meeting would increase.