TOKYO: The Bank of Japan will keep raising interest rates if its economic forecasts hold, a senior central bank official said, reinforcing a tightening bias even as fresh surveys show firms feeling the pinch of rising fuel costs linked to the Iran war.

While higher oil prices pose risks to economic growth, they could also push up underlying inflation by raising long-term inflation expectations, said Koji Nakamura, the BOJ's executive director overseeing monetary policy, in parliament on Friday.