JACKSON HOLE, Wyoming (Reuters) - The U.S. Federal Reserve's dovish shift will likely give the Bank of Japan some respite in its battle to tame a weak yen, but could complicate its efforts to raise interest rates if the two central banks' diverging policy paths keep markets jittery.

At an annual symposium in Jackson Hole, Wyoming, Fed Chair Jerome Powell said on Friday "the time has come" to cut rates as rising risks to the job market left no room for further weakness, offering an explicit endorsement of an imminent policy easing.

The remarks came hours after BOJ Governor Kazuo Ueda told parliament that while the BOJ will keep an eye out on the fallout from unstable markets, it will continue to hike rates if inflation remains on track to durably hit its 2% target.

The yen rose against the dollar after Ueda's remarks and extended its gains on those from Powell, as markets focused on prospects of a narrowing U.S.-Japan interest rate gap.

"The yen buying today is understandable given Governor Ueda showed very little sign of a shift in the views and plans of the BoJ following the financial market turmoil earlier this month," said Derek Halpenny, head of research global markets EMEA at MUFG, in a note to clients.

The Japanese currency's rebound comes as a relief for the BOJ, which has been under political pressure to stem its falls that hurt consumption by inflating imported food and fuel costs.

But the BOJ's rate hike path is full of uncertainty as Japan swims against the global rate-cut tide, which could leave its currency and stock prices susceptible to wild swings.

Having seen market rupture after the BOJ's July rate hike, the Japanese central bank already feels the need to tread slowly and carefully.

"Markets at home and abroad remain unstable, so we will be highly vigilant to market developments for the time being," Ueda said on Friday, adding that big market swings may affect policy decisions if they alter the board's inflation projections.

Domestic political considerations also complicate the BOJ's rate hike path as Prime Minister Fumio Kishida, who appointed Ueda to the top BOJ post, is set to step down and pass the baton to the winner of a ruling party leadership race in September.

While most leading candidates to succeed Kishida have embraced the BOJ's plan for moderate rate hikes, it is uncertain whether the new premier will support higher borrowing costs if volatile markets weigh on corporate profits.

"With so much uncertainty, the BOJ probably won't be able to take bold steps," said former BOJ board member Makoto Sakurai, ruling out the chance of another rate hike this year. "Until the domestic political situation stabilises, the BOJ might find it hard to raise rates," he said.

A latest poll by Reuters showed a majority of economists expect the BOJ to hike rates again this year, but more see the chance of it happening in December rather than October.

FRAGILE ECONOMY A RISK

The BOJ's surprise decision to hike rates in July and Ueda's signal of further rate hikes jolted financial markets earlier this month, forcing his deputy to offer dovish reassurance that no hikes will be coming until markets stabilise.

The key message from Ueda's remarks in parliament on Friday was that while the BOJ will be in no rush to hike rates, the market rout won't derail its longer-term plan to keep pushing up borrowing costs, said two sources familiar with its thinking.

Big data analysis of recent BOJ commentary underscores the bank's rate-hike stance with its bias on inflation remaining "very positive," said Jeffrey Young, chief executive officer of DeepMacro, a U.S. fintech firm that conducts AI-driven analyses of economic indicators and policymakers' comments.

"Could we get another one by the end of the year? Well, probably. I think that's what the model is saying," he said on the chance of another rate hike by the BOJ.

"If you have inflation and growth on the firm side, and you have BOJ rhetoric still biased to say that inflation and growth are both okay, the only thing that would really stop it from raising rates would be market fallouts."

Some analysts, however, are more cautious about the strength of Japan's economy. While consumption rebounded in the second quarter, rising living costs have weighed on household sentiment. A U.S. slowdown could also weigh on exports.

"Domestic demand is very weak," said Sayuri Shirai, an academic at Keio University in Tokyo. "From an economic perspective, there's little reason for the BOJ to raise rates."

(Reporting by Leika Kihara; editing by Diane Craft)