BNP Paribas SA (BNP) economist Ryutaro Kono, rejected by lawmakers as a nominee for the Bank of Japan (8301)'s board, said politicians are proposing monetary policies that are "divorced from reality." Politicians are spreading "sweet words" that such policies will reduce the public's burden, he said in an e-mailed note today. Kono is surprised that even conservatives are promoting such views, he said.

The economist said he was "not necessarily passive" about monetary policy, after he was criticized by lawmakers for failing to back more aggressive easing to spur growth and end decade-long deflation. He said a view that he was negative about an inflation target was a misunderstanding and added that a 2 percent goal, double the central bank's current aim, may be suitable for Japan in the long term.

The upper chamber of Japan's parliament yesterday rejected Kono, adding pressure on the central bank to expand easing after increasing asset purchases by 10 trillion yen ($122 billion) on Feb. 14. Governor Masaaki Shirakawa and his officials are set to review monetary policy on April 9 and 10 after Shirakawa met with Prime Minister Yoshihiko Noda today.

"Japan's imminent issues are to reform the social security system and to achieve fiscal health and so I think raising taxes is inevitable" as those goals can't be achieved through monetary policy, he said. Postponing "necessary reforms by proposing a high growth rate and unrealistic economic policies is more widespread among politicians than I expected."

Yesterday's vote by the upper chamber, where the ruling Democratic Party of Japan is a minority, leaves the BOJ with two vacancies on a nine-person board and more changes are coming: the terms of two deputy governors end in March next year and Shirakawa's tenure ends the following month.

The Liberal Democratic Party, the largest of the opposition groups, objected to the nomination, as did some members of the DPJ.