New premier Ishiba39;s remarks cast doubt on BOJ39;s rate hike plans
Political uncertainty, yen may prompt BOJ to hold fire for now
BOJ ended negative rates in March in historic shift

TOKYO, Oct 4 Reuters Bank of Japan Governor Kazuo Ueda39;s efforts to lift rockbottom borrowing costs face fresh challenges as a yen rebound and the new political leadership39;s preference for loose monetary policy raise the hurdle for rate hikes.

New Japanese premier Shigeru Ishiba stunned markets this week when he said the economy was not ready for further rate hikes, an apparent aboutface from his previous support for the BOJ unwinding decades of extreme monetary stimulus.

The surprisingly blunt remarks pushed the yen lower against the dollar and cast fresh doubts over how aggressive the BOJ would be in raising rates.

While politics is unlikely to derail the longerterm case for rate hikes, analysts say policy deliberations could get bumpy heading into a general election due Oct. 27.

I don39;t think the remarks were intended to apply huge pressure on the BOJ. Rather, Ishiba probably had the election in mind, said Katsuhiro Oshima, chief economist at Mitsubishi UFJ Morgan Stanley Securities. He was seen by markets as a hawk, so may have wanted to finetune that image a little bit.

The looming election this month means many analysts expect the BOJ will hold off raising rates at its Oct. 3031 meeting.

Ueda was appointed last year by former Prime Minister Fumio Kishida, who stepped…