Bank of Japan policy board member Hajime Takata said the central bank should take a nimble, data-dependent approach to further interest rate increases as it enters a new phase of monetary policy normalization, according to a speech on Wednesday.

Takata said the BOJ's 2% price stability target has almost been achieved, while developments in prices and the economy will remain key to determining the timing and pace of further rate increases.

He said the central bank should not be constrained by a predetermined interval between rate hikes or by market expectations.

Instead, policymakers should assess domestic financial conditions and developments in overseas economies when deciding whether to adjust rates.

Takata also pointed to upside risks to inflation, including higher costs stemming from developments in the Middle East and stronger global demand related to artificial intelligence.

The bank should also pay attention to financial-market developments, including movements in government bond yields and the foreign exchange market, when assessing the appropriate degree of monetary accommodation, he said.

The BOJ raised its policy rate to around 1% in June. Takata subsequently called for a further increase to 1.25% at the July policy meeting.