Bank of Japan Governor Kazuo Ueda said on Tuesday that anchoring underlying inflation near the central bank's 2% target is becoming increasingly important, signaling the BOJ is prepared to keep raising interest rates to curb the risk of excessively high inflation.

Speaking at an annual gathering of securities firms, Ueda noted that economic and price developments are in line with the BOJ's baseline projections, with the economy recovering moderately and long-term inflation expectations on the rise.

He also warned that risks exist of underlying inflation exceeding the BOJ's target, citing factors such as price pressures stemming from the conflict involving the United States and Israel against Iran, strong artificial intelligence (AI)-related demand, and a weak yen.

Ueda said that despite last month's rate hike, "financial conditions remain accommodative and continue to support economic activity," adding that the BOJ will keep raising borrowing costs to adjust the degree of monetary support.

He added that ensuring underlying inflation is anchored around 2% has become more important than ever, so that the risk of inflation overshooting does not materialize and harm the economy.