The economy may overheat if Japan's "very low" interest rates are raised too slowly, Bank of Japan Policy Board member Miyako Suda said Thursday.

"If adjustments are too slow, the risk of the economy overheating may rise," she said in a speech in Tsu, Mie Prefecture. "It's desirable that early and gradual action is taken."

Expectations for the central bank to hike interest rates have dwindled since the U.S. subprime mortgage meltdown stirred global market turbulence and heightened the risk of a recession in the U.S.