Shigeru Ishiba, the new Prime Minister, faces lower approval ratings than his predecessors, which could complicate his Liberal Democratic Party's prospects in the looming election.

As the general election approaches on October 27, analysts anticipate that the BOJ will refrain from increasing rates at its meeting scheduled for October 30-31.

Ishiba's recent comments have led to a weakening of the yen against the dollar, raising questions about the BOJ's future aggressiveness in rate hikes.

Political uncertainty in Japan is expected to persist as the outcomes of the upcoming elections could significantly impact the Bank of Japan's (BOJ) strategy and plans for rate hikes.

In a surprising shift, Ishiba stated that the economy is not ready for further rate hikes, contradicting his earlier support for unwinding the BOJ's monetary stimulus.

The new cabinet under Ishiba has reaffirmed its commitment to reflating the economy, which complicates the BOJ's plans for tightening monetary policy.

Governor Kazuo Ueda faces significant challenges in raising borrowing costs, especially with the yen's recent rebound and the new political leadership's preference for a loose monetary policy.

The yen's recovery from a three-decade low has alleviated some immediate pressure for further rate hikes, contributing to a moderation of inflation driven by import costs.

The BOJ has indicated a cautious approach to future rate hikes, citing concerns over market instability and global economic uncertainties.

Ueda aims to maintain interest rates between 1-1.5% to strike a balance that avoids either cooling or overheating the economy, contingent on economic forecasts.

If Ishiba secures a strong election result, the BOJ may consider rate hikes in December or January; however, political turmoil could hinder these plans.

Ueda, who initiated the first rate hike in 17 years in March, has signaled a cautious approach as Japan continues to navigate its recovery from deflation.