SAITAMA, Japan--The Bank of Japan remains alert to inflation risks and will discuss the need to tighten policy, Deputy Gov. Ryozo Himino said, as markets increasingly bet that the next rate hike is near.

"With underlying inflation approaching 2%, we must make a comprehensive judgment by weighing how thoroughly to verify data against the risk of falling behind the curve if we fail to act in a timely manner," Himino said at a news conference Thursday after meeting business leaders in Saitama, a city north of Tokyo.

"Taking such points into consideration, it is necessary for us to have in-depth discussions at every policy meeting to reach a balanced decision," he added.

Speculation about potential monetary tightening at the BOJ's meeting set for Sept. 17-18 has intensified following Tokyo's joint intervention with Washington to support the yen. The overnight index swaps market is pricing in a nearly 90% chance of a rate increase at the coming meeting.

Treasury Secretary Scott Bessent has voiced confidence in BOJ Gov. Kazuo Ueda's handling of policy--a remark market participants interpreted as a signal that the U.S. favors further monetary tightening in Japan.

Despite the joint intervention efforts, the yen remains soft. It was last hovering around 159.35 against the dollar, remaining at levels that present a major threat to the stability of Japan's price trends.

In his morning speech, the BOJ deputy governor emphasized the importance of stabilizing prices at around 2%.

"If underlying inflation deviates upward to a level above the price stability target of 2%, that would have an adverse impact on the economy, and we should pay greater attention to the upside risk to prices than in the past," he said.

Himino reiterated the bank's long-standing stance of seeking further rate increases, noting that the nation's financial conditions are still accommodative.

He said the timing and pace of the bank's future policy moves depend on risks to the economic outlook, including the impact of the Middle East conflict, foreign-exchange rates and demand related to artificial intelligence.

The BOJ maintained its policy rate at 1% at its previous meeting in July as policymakers examined the effects of its previous increase in June.

While the deputy governor's speech didn't directly hint at potential action in September, he sounded generally hawkish by laying out reasons why the central bank should tighten policy, said Yusuke Matsuo, an economist at Mizuho Securities.

"Deputy Gov. Himino is effectively giving tacit approval to market expectations for a rate hike, given that he didn't say anything to dampen such views," Matsuo said.