By Leika Kihara

TOKYO (Reuters) – Japanese Prime Minister Shigeru Ishiba stated on Saturday that he would refrain from interfering in monetary policy, emphasizing the central bank's role in achieving price stability.

"It's important to avoid vocally intervening" in monetary policy, Ishiba noted during a news conference with major party leaders ahead of the general election on Oct. 27.

"Whatever the government has to say, the Bank of Japan makes an individual decision on policy," he added. Ishiba expressed confidence in the BOJ's governor and staff regarding their responsibility for achieving price stability.

He highlighted that strong consumption is crucial for a sustained exit from deflation and called for measures to enhance real wages.

Ishiba, who became Japan's prime minister on Oct. 1 after winning the ruling party's leadership election, had surprised markets with his comments after taking office, indicating that the economy was not ready for further interest rate hikes. This marked a shift from his previous support for the BOJ in unwinding extreme monetary stimulus.

His candid remarks led to a decline in the yen against the dollar and raised questions about the BOJ's potential aggressiveness in raising interest rates.

It is unusual for the Japanese leader to publicly discuss the BOJ's interest rate policy, as doing so could compromise the central bank's legally mandated independence in setting monetary policy.

The BOJ had ended negative interest rates in March and raised the short-term benchmark to 0.25% in July, reflecting progress toward the 2% inflation target.

Governor Kazuo Ueda has indicated the bank's willingness to continue increasing interest rates if economic indicators align with forecasts.

While politics may not disrupt the long-term outlook for rate hikes, analysts suggest that uncertainty regarding Ishiba's monetary policy position and the election results could influence the BOJ's timeline for raising borrowing costs.