Inkhabar webdesk

By Leika Kihara TOKYO (Reuters) -A pledge by Japan's next likely prime minister to reassert government sway over the central bank has fanned worries about political interference in monetary policy, however, a weak yen and politics could limit any such push. Sanae Takaichi is set to become Japan's next premier and has already rattled markets by declaring control over the direction of monetary policy following her party leadership win, reviving memories of Shinzo Abe's radical economic stimulus last decade. "The government must be responsible for fiscal and monetary policy. The BOJ will then consider the most appropriate means," Takaichi told a news briefing upon her victory in the weekend race, stressing the need to focus on reflating growth. Her leadership could present the biggest political challenge to Bank of Japan Governor Kazuo Ueda, a soft-spoken academic who took the helm two years ago charged with dismantling the radical monetary stimulus of his Abe-appointed predecessor. The extent of Takaichi's challenge, however, is likely to be tempered by the risks of inflation, a sharp yen decline and her own party's weak standing – problems her late mentor Abe never faced. Differences between the government and central bank, instead, are more likely to be seen in communications and expectations around the extent and timing of future interest rate hikes, analysts and sources say. That alone could be enough to stir up market volatility. "It's a huge threat for the BOJ as her remarks show she has little respect for central bank independence," said former BOJ board member Takahide Kiuchi. "It's quite likely she will interfere in monetary policy and try to keep rate hikes in check," said Kiuchi, who sat at the board when former BOJ chief Haruhiko Kuroda deployed massive stimulus in 2013. "I'm sure people at the BOJ are very alarmed." CENTRAL BANK INDEPENDENCE UNDER FIRE The challenge to the BOJ's independence comes as central bank policy around the world, from the United States to New Zealand to Indonesia, comes under increasing pressure from new political leadership. Under law that took effect in 1998, the BOJ nominally enjoys independence although that has not shielded it from past political pressure to expand monetary support for a moribund economy. While the government cannot fire a sitting BOJ chief, it has the authority to pick the governor and members of the board, which then needs parliamentary approval. The most extreme case of intervention came in 2013, when Abe hand-picked Kuroda to overhaul the BOJ's caution over ramping up stimulus under then governor Masaaki Shirakawa. Known more for her focus on nationalist policies, Takaichi's economic views are nonetheless framed by advisers who advocate expansionary fiscal and monetary policy. Such intervention could come directly through public comments by the premier and political aides, or in informal conversations among staff and executives, say sources with knowledge of past exchanges between the two sides. Former BOJ Deputy Governor Masazumi Wakatabe, who has ties with Takaichi, said the BOJ will likely find it hard to justify raising interest rates this year given weakness in the economy. CONSTRAINTS ABOUND Unlike the Abe era, however, Takaichi's urge to keep policy accommodative is likely to be constrained by new economic and political realities. For one, the presence of veteran lawmakers with more conservative views on economic policy may counter Takaichi's radicalism, analysts say. Among them is former premier and finance minister Taro Aso, who was appointed party vice president. He has pushed to keep heavily indebted Japan's fiscal house in order and avoid overreliance on loose monetary policy to reflate growth. Unlike during Abe's days, Takaichi's Liberal Democratic Party (LDP) rests on shaky political ground with its minority coalition facing the risk of a break-up that could deprive her votes needed to be elected premier in parliament. Even if she becomes prime minister, Takaichi may be forced to appease opposition parties by handing over the key finance minister post to one of their leaders – adding uncertainty to how much clout she will have in making demands on the BOJ. The economic backdrop, too, has changed dramatically from the days of Abenomics, when Japan had experienced two decades of deflation, subdued growth and a strong yen that hurt the export-reliant economy. Now, Japan has seen inflation exceed 2% for well over three years as rising raw material costs, due in part to a weak yen, prod firms to hike prices. Delaying rate hikes for too long could lead to a further sharp decline in the yen and worsen consumer inflation, which has been politically disastrous for Takaichi's predecessors. Rising living costs are seen as a key factor that led to the LDP's huge loss in an upper house election in July. Speculation Takaichi's presence will force the BOJ to delay rate hikes has already pushed the yen to an eight-month low per dollar, drawing verbal intervention by Japanese authorities. Takaichi may nod to a near-term rate hike if yen falls persist and threaten to push up already high living costs, said former BOJ executive Kazuo Momma, who oversaw negotiations with Abe's administration. "The biggest loser from a weak yen is the government," Momma said. "If Takaichi's approval ratings were to fall from the outset, it would be because of a weak yen. I'm sure people around her like Aso are well aware of that." (Reporting by Leika Kihara; Editing by Sam Holmes)

(The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)

By Florence Tan SINGAPORE (Reuters) -Oil prices were little changed on Thursday as investors weighed a ceasefire deal in Gaza that could ease geopolitical tensions in the Middle East against stalled peace talks in Ukraine that could sustain sanctions on Russia and curb its exports. Brent crude futures rose 2 cents to $66.27 a barrel by 0629 GMT. U.S. West Texas Intermediate crude fell 1 cent to $62.54. U.S. President Donald Trump said that had reached a long-sought deal for a Gaza ceasefire and hostage release under a plan for ending the two-year-old war in the Palestinian enclave. Israeli Prime Minister Benjamin Netanyahu said he would convene his government to approve the ceasefire agreement. The signing of the agreement is expected to take place at noon Israel time (0900 GMT) on Thursday. "The devil is always in the details, and I would avoid speculating right now due to the many false starts that we have witnessed in the past," Rystad Energy's chief economist Claudio Galimberti said in a note. The war in Gaza has supported oil prices as investors have weighed the potential risk to global supply if the fighting developed into a wider regional conflict. Michael McCarthy, CEO of investor platform Moomoo Australia and New Zealand, said the Gaza ceasefire is unlikely to change oil supply in the Middle East as OPEC+ has not hit its increased production targets. The group, made up of the Organization of the Petroleum Exporting Countries and allies, agreed on Sunday to a November output hike that was smaller than market expectations, easing oversupply concerns. Prices had gained around 1% on Wednesday to reach a one-week high after investors viewed stalled progress on a Ukraine peace deal as a sign that sanctions against Russia, the world's second-largest oil exporter, will continue for some time. "As long as the war in Ukraine continues, the geopolitical risk premium is destined to remain elevated, as Russia’s oil production at risk remains high," Rystad's Galimberti said. Meanwhile, total weekly U.S. petroleum products supplied, a proxy for U.S. oil consumption, rose last week to 21.990 million barrels per day, the most since December 2022, according to a report from the Energy Information Administration on Wednesday. JP Morgan analysts said global oil demand began on a softer note in October as numerous consumption indicators, including container arrivals at the Port of Los Angeles, truck toll mileage in Germany and container throughput in China, pointed to a moderation in activity. Global oil demand averaged 105.9 million bpd in the first seven days of October, up 300,000 bpd from last year's level though 90,000 bpd lower than JP Morgan's estimates, its analysts said in a client note. The pace of global crude and products inventory building has also slowed, expanding by 8 million barrels last week, the slowest increase in the past five weeks, they said. (Reporting by Florence Tan in Singapore and Georgina McCartney in Houston; Editing by Christopher Cushing anda Kim Coghill)

(The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)