It's taken roughly five months, but in addition to having skeptics within the BoJ, NIRP has now encountered political opposition.
Ahead of an Upper House election next month, Shiori Yamao, a former public prosecutor turned policy chief of the Democratic party (the main opposition party to Prime Minister Shinzo Abe's Liberal Democratic Party) is calling for the BoJ to get rid of its negative interest rate policy due to... drum roll... shifting the burden onto savers.
"The Democratic Party wants to call for the withdrawal of negative interest rates. Negative interest rates shift the burden onto savers. They cause unease among smaller companies because they make financial institutions unwilling to loan, or prompt them to call loans in early." Yamao said.
The Democratic Party faces a difficult battle in trying to differentiate itself from Abe's party, and along with calling for NIRP to be rescinded, Yamao is hammering Abe for the decision to delay increasing the sales tax (implicitly admitting Abenomics has failed). The funds from the tax increases were going toward social programs such as bolstering child care to enable mothers to work, and help to the elderly on low incomes. In order to pay for the benefits, Yamao said that regardless of the tax hikes, other bloated areas of spend could be decreased. "We would cut back the wasteful public works which have increased under the LPD government. It's the old pattern of stimulating the economy through public works."
Only 12% of respondents to a poll published June 6 say they plan to vote for the DP in the Upper House election, while 39% will vote for Abe's LDP.
While it doesn't seem that the votes are there yet to change the course of Abenomics, it is important to note that the dismal economic failure of Abenomics has now become a political issue for the Prime Minister to deal with. As we have detailed many times, Abenomics has failed to boost inflation, failed to boost wages, and has plummeted trade to post crisis lows.
JPY is strengthening and Japanese stocks are tumbling...
If as this continues, the political pressure will continue to grow on Abe, as it appears that the people of Japan are beginning to grow tired of the same old same.