Kazuo Ueda said the BOJ could accelerate rate hikes if financial conditions are judged overly accommodative, sharpening its hawkish message after Friday's policy decision.
Meaningful upside inflation risks are building from rising wages and prices, elevated oil costs linked to the Iran war, and a weak yen that lifts import prices.
The warning came after the BOJ kept its benchmark rate at 1% and signaled further normalization, while saying it will keep watching currency moves closely.
That stance reinforces market expectations of another increase as the BOJ weighs inflation running above its 2% target against still-loose financial conditions.