Bank of Japan Governor Kazuo Ueda attends a press conference after a BOJ policy meeting in Tokyo, Japan, October 30, 2025. REUTERS/Kim Kyung-Hoon

By Makiko Yamazaki

TOKYO, Dec 9 (Reuters) - The Bank of Japan plans to ramp up government bond buying if long-term interest rates rise sharply, Governor Kazuo Ueda said on Tuesday, noting that the recent rate rises had been "somewhat rapid".

"Recently, long-term rates have been rising at a somewhat rapid pace," Ueda told parliament, after the benchmark 10-year Japanese government bond yield hit 18-year highs this week.

He also said that in exceptional circumstances, where long-term interest rates rise sharply in deviation from normal market movements, the BOJ intended to take flexible measures, such as increasing government bond purchases.

On monetary policy, Ueda said the likelihood of the BOJ's baseline economic and price outlook materialising had been gradually increasing, considering reduced uncertainty around the U.S. economy and tariff policies.

"Ahead of our next policy meeting, we are actively collecting information on firms' wage plans for the next fiscal year," he said. "Taking this and other information into account, we intend to make an appropriate judgment," he added.

He also said that adjusting the degree of monetary easing would help ensure stability in financial and capital markets and place Japan's economy on a sustainable growth path at a time when a tighter labour market was increasing upward pressure on wages and prices while real interest rates remain extremely low.

In a recorded interview with the Financial Times, Ueda expressed confidence in the economic outlook, predicting that underlying inflation will continue to rise toward the bank's 2% inflation target.

Ueda said risks of accelerated inflation were not very high, but pointed out that the BOJ was carefully looking at the possibility of food price inflation or weakness of the yen lasting longer than expected and feeding into inflation expectations.

(Reporting by Makiko Yamazaki. Editing by Jacqueline Wong and Mark Potter)