A Bank of Japan board member has indicated a further interest rate increase is needed amid the risk of overheating inflation and financial activity.



Takata Hajime made the comments in a speech in Japan on Wednesday.



He says it is important for the central bank to consider gear shifts gradually, even after the rate hike in January.



Takata adds that the BOJ's price stability target of 2 percent will likely be achieved in fiscal 2025 or later, due to solid increases in base pay.



But he also notes what he calls domestic inflationary pressures. Another risk factor is potential exchange-rate volatility amid expected growth in the US economy.



But Takata refrained from specifying how far the BOJ's policy rate should increase.
He says suggesting a specific rate would hinder the policy flexibility needed by the central bank.