Bank of Japan board member Kazuyuki Masu said the central bank should continue raising its benchmark interest rate as underlying inflation approaches 2% and financial conditions remain accommodative. Markets are pricing in about a 97% chance of a 0.25 percentage-point increase from the current 1% at the BOJ’s Sept. 18 policy meeting. Masu said the priority is to prevent underlying inflation from rising well above 2%. He cited higher fuel, chemical, transport and fertilizer costs linked to the war in Iran as risks that could make price pressures more persistent rather than temporary. His increasingly hawkish stance adds to a broader shift toward tighter policy among BOJ officials. The case for another increase has also been strengthened by an upward revision to second-quarter GDP growth to an annualized 1.4% and July wage growth reaching its highest level in about 30 years. Recent comments by US Treasury Secretary Scott Bessent calling for additional BOJ rate increases have further supported expectations. A Reuters poll previously showed expectations for the policy rate to reach 1.25% on Sept. 18 and 1.75% in the second quarter of 2027.