Very important but difficult decision looms at BOJ at 6:00

The BOJ is expected to have a tough time deciding whether or not to unleash fresh stimulus on Thursday against a conflicting backdrop of domestic economic weakness and global geopolitical risks.

The central bank has held its fire since the shock-and-awe introduction of negative rates in January, and the majority of market participants expected that trend to continue this month, with a possibility of action in July.

"Central banks around the world, especially the Japanese, are sitting on their hands waiting to see how global developments over the next week or two are going to unfold," explained Kathy Lien, managing director of BK Asset Management, referring to the Federal Reserve meeting held on Wednesday and U.K. Brexit referendum in particular.

The Fed's moves and the upheaval caused by a Brexit could have a sharp impact on the safe heaven Yen, which has already rallied 13.5 percent year to date against the greenback, inflicting pain on the export-centric companies listed on Japan's benchmark Nikkei 225.

But there are commentators betting on action this week. They point to stubbornly low Japanese consumer price inflation (CPI) and the rallying yen as key factors justifying further quantitative and qualitative easing (QQE).

"The fundamental case for additional BOJ easing remains strong," Izumi Devalier, economist at HSBC, explained in a recent note. "In our view, the longer the board waits to address downside risks to the economy and prices, the more markets will question the central bank's commitment towards its inflation target."

Among potential easing tools, she said she expected the BOJ to raise its monetary base target to 90 trillion yen a year, from 80 trillion yen currently, and expand the scope of its asset purchases to include local government bonds and government agency (FILP) bonds.

CNBC

Read more:

• And for all the bounty hunters: Iran offers $80m for the head of Donald Trump
• US service member and 2 US Defense Dept contractors killed in Kenya attack
• Iranian Quds leader Qasem Soleimani has been killed – how are markets reacting
• A calm end of an otherwise loud 2019
• Old but Gold – Top 5 posts of Varchev Finance