Bank of Japan Deputy Governor Ryozo Himino said upside risks to underlying inflation exceeding the 2% target require greater vigilance and timely rate hikes to avoid abrupt tightening later. Speaking Wednesday at the Saitama Prefecture Financial and Economic Forum in Saitama City, he said the BOJ should stabilize underlying inflation around 2% while assessing economic, price and financial conditions. The BOJ raised its policy rate to 0.75% at its July meeting, and markets widely expect a September increase. Himino’s comments were consistent with those expectations, although uncertainty over U.S. trade policy and escalating Middle East tensions means the decision will depend on incoming data. He said policy adjustments would also consider expanding artificial intelligence-related demand and exchange-rate movements, noting that a weaker yen may push prices higher faster than in the past. Himino described financial conditions as still accommodative and said rate hikes could improve the allocation of assets toward investments with growth potential. He emphasized that the BOJ would manage policy flexibly and based on a wide range of information rather than through mechanical increases.