By Leika Kihara

FUKUSHIMA (Reuters) -The Bank of Japan may need to raise interest rates "decisively" to address inflation risks even if uncertainties over U.S. tariffs persist, a hawkish member of its board said, highlighting the bank's attention to growing price pressures.

Board member Naoki Tamura said inflation was speeding up and moving faster than the pace he had projected at the BOJ's previous policy meeting on May 1, adding that companies may start to pass on labour costs more substantially by hiking services prices.

"If upward inflation risks heighten, the BOJ may need to act decisively as a guardian of price stability," Tamura told a news conference on Wednesday.

While the U.S. tariffs will weigh on Japan's economy and prices for the time being, consumer inflation is likely to move around the 2% handle through fiscal 2027, he said in a speech earlier in the day to business leaders in Fukushima.

"There is a good possibility our price stability target will be achieved earlier than expected," he said.

The remarks are more hawkish than those of governor Kazuo Ueda, who has stressed the need to pause rate hikes due to "extremely high" uncertainty surrounding U.S. trade policy.

In current forecasts made in May, the BOJ expects underlying inflation to stagnate for some time, before re-accelerating to levels consistent with its price target in the latter half of its three-year projection period through fiscal 2027.

Tamura said the forecasts should be viewed as provisional and susceptible to big revisions depending on developments over U.S. tariff policy.

U.S. tariffs may slow, but not derail, Japan's economic recovery as they mainly hit the manufacturing sector, which makes up just around 20% of gross domestic product (GDP), he said.

But Tamura offered few clues on when exactly the BOJ could raise interest rates, saying the decision will depend largely on how U.S. tariff policy evolves and the impact on the economy.

"We need a bit more information to judge whether underlying inflation has reached 2%," Tamura told the news conference.

"I don't have any pre-set idea. It could come early or it could take a while," he said when asked about the chance of another rate hike this year.

SOLE HAWKISH DISSENTER

The BOJ ended a decade-long, massive stimulus programme last year and in January raised short-term rates to 0.5% on the view Japan was on the cusp of durably meeting its 2% inflation target.

While the central bank has signalled readiness to raise rates further, the economic impact of higher U.S. tariffs forced it to cut its growth forecasts and complicated decisions around the timing of the next rate increase.