The Bank of Japan's decision to abandon its final super-easy monetary policy in the developed world is expected to cause stock markets to open lower.

The Bank of Japan's decision to abandon its final super-easy monetary policy in the developed world is expected to cause stock markets to open lower on Tuesday as investors assess the interest rate outlook for 2023.

After the Bank of Japan maintained its benchmark rate at record lows but increased the range for yield variations in the benchmark government bonds, Asian stocks fell on Tuesday, with the Nikkei 225 in Japan falling 2.5%. European market indices are anticipated to follow suit.

The 10-year Japanese Government Bond yield fluctuation range will be increased from a range of negative 0.25% to 0.25% to between negative 0.5% and 0.5%, according to the central bank.

As the nation struggles with rising inflation, this action has been seen as a step toward abandoning its policy of yield curve management and nearly zero interest rates.

In a further effort to curb inflation, the European Central Bank last week increased interest rates by 50 basis points, joining the U.S. Federal Reserve, the Bank of England, and the Swiss National Bank in doing so.

German factory gate prices decreased 3.9% in November over the previous month, although the annual rate remained high at 28.2%.

In a separate development, the energy ministers of the European Union decided on Monday to set a cap on gas prices at €180 per megawatt hour. This is the latest effort to reduce gas prices, which have increased energy costs and contributed to record-high inflation this year. 

Tuesday morning saw a little increase in oil prices as demand expectations for the new year increased as China, the world's largest crude importer, fully lifted its COVID limitations. 

The news that the United States government plans to replenish its Strategic Petroleum Reserve, starting with a 3-million-barrel purchase in February, after running it down to its lowest level in over 40 years in an effort to control prices, contributed to the upbeat mood.

Later in the day, the American Petroleum Institute releases its estimate of U.S. crude oil stocks; it is predicted to indicate a little decline following the previous week's significant rise.

(Sources: investing.com, reuters.com)