The Bank of Japan needs to raise interest rates further to ensure it does not fall behind the curve on fighting inflation, one of its board members has said, as US Treasury secretary Scott Bessent intensifies pressure on Tokyo to tighten monetary policy.

The comments made on Thursday by Kazuyuki Masu, who sits on the BoJ's Monetary Policy Committee, come ahead of a meeting next week when the bank is widely expected to raise rates to their highest level in more than 30 years. Japan has come under US pressure to raise rates and strengthen the yen, which tumbled to a 40-year low this year. Bessent said on Tuesday that he had "pretty good insight into what the Bank of Japan is going to do".

In a speech to Japanese business leaders in Fukui, Masu said the BoJ "might inevitably need to implement a rapid policy interest rate hike" if inflation accelerated. "To complete the normalization of monetary policy in Japan, I am convinced that the Bank needs to raise the policy interest rate further," Masu added. "What is most vital from now on is to ensure that the underlying inflation rate does not significantly exceed 2 per cent."

Market participants overwhelmingly expect the BoJ to raise its policy rate by 0.25 percentage points to 1.25 per cent next week, as it continues to "normalise" monetary policy following decades of deflation and negative rates. The bank last raised rates in June to around 1 per cent, its highest level in 31 years.