Shizuka Kamei, policy chief of the ruling Liberal Democratic Party, urged the Bank of Japan to ease monetary policies to put the economy on a self-sustainable recovery path.

Kamei said the central bank should carry out a quantitative easing of monetary policy and return to the "zero-interest-rate" policy it abandoned in August.

"The reason why the economy is still not on a stable recovery track is that there is a discrepancy between (the BOJ's) financial policies and (the government's) economic policies," Kamei said during a lecture at the Foreign Correspondent's Club of Japan in Tokyo.

He said the recent monthly economic report proved the BOJ's renunciation of its "zero-interest-rate" policy turned out to be a mistake, noting the BOJ's economic forecast was too optimistic.

Indicators on rise

All the key leading, coincident and lagging economic indicators were confirmed Monday to have hit or topped the boom-or-bust line of 50 percent in December, after falling below the line in November, the Cabinet Office says in a revised report.

The diffusion index of the coincident indicators was revised upward to 80 percent from the preliminary 71.4 percent, while lagging indicators were revised upward to 57.1 percent from 50 percent.

The index of leading indicators, a measure of economic growth six to nine months ahead, remained unchanged at 50 percent in December.

A reading above 50 percent is considered a sign of economic expansion, while a reading below that level is taken as a sign of contraction.

The coincident index on the current state of the economy was revised upward because of improved data on manufacturers' consumption of raw materials, manufacturers' rate of operation, and sales of small and midsize manufacturers, the report says.

Thanks to the improved data on inventories of raw materials held by manufacturers, the index of lagging indicators, reflecting activity in the recent past, was revised upward, it says.

In November, the indexes of the leading, coincident and lagging economic indicators fell to 30 percent, 30 percent and 42.9 percent, respectively, all having slipped below the 50 percent line for the first time in 23 months.

The October indexes of the leading, coincident and lagging economic indicators registered 77.8 percent, 70 percent and 64.3 percent, respectively.