Negative Rates Affecting Consumer Behaviour Just not in the way the BOJ Thought

The negative interest rate policy adopted by the Bank of Japan (BOJ) is beginning to affect consumer behavior.

Major department stores are seeing a surge in the number of people signing up for their “Tomonokai” services, plans allowing customers to set aside money for a certain period to eventually receive “high yield” gift vouchers and other items. In the car industry, some dealers have set up zero-interest loans in an attempt to win customers. In the meantime, safes for household use are selling well. As such, it is unclear whether the negative interest rate policy will in fact stimulate consumption as planned.

After registering for the Tomonokai service at the Takashimaya department store in Tokyo’s Nihonbashi on Feb. 22, a 55-year-old housewife from Shiki, Saitama Prefecture, said, “My husband and I talked it over and concluded that there’s no point in depositing money with banks (offering low interest rates on deposits), and decided to sign up” for the service.

Under Takashimaya’s Tomonokai service, people primarily deposit 5,000 to 50,000 yen each month for one year. At the end of that year, they receive shopping cards worth the total deposited plus one month, which can be spent at Takashimaya-affiliated stores. It has no expiration date. The Saitama woman told the Mainichi Shimbun, “I didn’t feel any attraction to it before, but I started to think it’s a good deal after the negative interest rate policy was reported by the media.”

via Mainichi

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza