BOJ board member Kazuyuki Masu: 'Bank of Japan will keep raising rates'

Bank of Japan Policy Board Member Kazuyuki Masu said the central bank should keep raising its policy rate to prevent the "underlying inflation rate" from significantly exceeding 2 percent.

Speaking to business leaders in Fukui Prefecture on Thursday, Masu said, "As I explained earlier, the underlying inflation rate is very close to 2 percent, and financial conditions remain accommodative." He added that "the Bank of Japan will continue to raise its policy rate and adjust the degree of monetary easing," according to Bloomberg.

He added, "Going forward, the most important thing is to prevent the underlying inflation rate from significantly exceeding 2 percent."

Bloomberg reported that Masu, once seen as a centrist, has recently taken on a more hawkish tone, reflecting a broader shift in sentiment across the Bank of Japan's policy board.

People familiar with the matter told Bloomberg earlier this month that the Bank of Japan is leaning toward raising its benchmark interest rate by 25 basis points. The move would come at its monetary policy meeting scheduled for Sept. 16-17.

The Bank of Japan's remaining monetary policy meetings this year are scheduled for Oct. 29-30 and Dec. 17-18.

Masu supported holding rates steady at the April meeting, backed a rate hike in June, and supported holding rates steady again in July.

At its June meeting, the Bank of Japan raised its policy rate by 25 basis points, from around 0.75 percent to around 1.0 percent, marking its highest level in 31 years, since 1995. Seven of the bank's eight policy board members voted in favor of the increase.

The bank then held rates steady at its July meeting. Hajime Takata was the only board member who opposed that decision.