By Megumi Fujikawa

The Bank of Japan needs to keep adjusting the degree of monetary accommodation in stages, policy board member Hajime Takata said Wednesday as he warned about inflation risks.

"It is important to shift gears gradually even after the additional interest-rate hike in January to avoid the risks of price upswings and financial overheating from becoming a reality," Takata said in a speech to business leaders in Japan's northern prefecture of Miyagi.

Takata said further rate hikes would be possible if positive corporate activity--including price pass-through, pay increases and capital spending--continues, and if the bank's economic outlook is being realized.

The Japanese central bank raised the policy rate to 0.5% in late January and has pledged to seek more interest-rate hikes if the economy and prices develop in line with its forecasts.

Many economists expect the BOJ's next tightening to come around the summer time so the bank can sustain the pace of one hike in every six months.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

(END) Dow Jones Newswires

February 18, 2025 21:08 ET (02:08 GMT)

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