is normally reflected in the long - term market rates. this source of information could thus be lost and this would impair the functioning of the market. but as i perceive it, there have not been any such signs so far. in addition, i find it very difficult to imagine that the market agents would stop making independent assessments because we are publishing our own view of interest rate developments. they if anyone know that the interest rate path is a forecast and they therefore have strong reasons for continuing to search for information via other channels than the riksbank. so far it has been clear that we and other market agents have actually had slightly different views regarding how the interest rate will develop in the future. and this is actually a sign that things are as they should be. it is quite natural that forecasters make different judgements, particularly in the slightly longer term. in the long term, there are also more factors than expected monetary policy that have significance for interest rates. we have so far only presented two forecasts for the policy rate, and as i mentioned earlier, there is a fairly large measure of ” learning by doing ” for all those involved before everything falls into place. everything does not always work perfectly from the start. but as i said, the purpose is that our communication will become clear and more efficient. and i am fairly convinced that we will get there, once the new system has been established. clarity in the way we express ourselves in speeches and press releases the riksbank has also changed its method of signalling monetary policy in speeches and press releases. in a broad sense, signalling means that we communicate in some way what we are intending to do with the repo rate. a narrower – and perhaps more common – interpretation of signalling is that it is when representatives of the riksbank describe in speeches and press releases how they consider the interest rate should be set at the next meeting, and perhaps slightly further ahead. previously, the riksbank signalled ” by degrees ”. between the monetary policy meetings the individual executive board members held speeches on the theme of " the current situation ” or something similar. there we indicated, more or less explicitly, how we thought the interest rate should be set. when it was time for the monetary policy meeting, sufficient information was assumed to have been released “ by degrees ” with regard to how the executive board as a whole were reasoning so that the economic agents would not be surprised by the interest rate decision taken at the meeting. but with the broader

bonds ( bank bonds and corporate bonds ) and government bonds continue to contract. however, spreads between bonds with low credit ratings and government bonds still remain wide. stock prices are level on the whole and are basically moving in the range of 11, 000 - 12, 000 yen. in the foreign exchange market, the yen continued to appreciate reflecting the overall downtrend in the u. s. dollar, but has been mixed thereafter since late may due mainly to the news on yen - selling intervention by the japanese monetary authority. with regard to corporate finance, private banks are becoming cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue - chip companies. the lending attitudes of financial institutions as perceived by firms are becoming severe. in the corporate bonds and cp markets, the issuing environment for firms with low credit ratings remains severe, but the environment for firms with high credit ratings is on an improving trend. credit demand in the private sector continues to follow a downtrend mainly because firms are decreasing their business fixed investment while continuously reducing their debts. amid these developments, private banks ’ lending continues to decline by about 2 - 3 percent on a yearon - year basis. the year - on - year growth rate of the amount outstanding of corporate bonds issued is decreasing somewhat. the year - on - year growth rate of the amount outstanding of cp issued is declining recently, although the amount is still well above the previous year ’ s level. the monetary base continued to increase substantially by around 30 percent from the previous year ’ s level in may, although the growth rate slowed slightly due partly to the abatement of liquidity demand prompted by a system failure of a major bank group. the year - on - year growth rate of the money stock ( m2 + cds ) remained around 3. 5 percent. funding costs for firms continue to be at extremely low levels on the whole. overall, the recent financial environment remains extremely easy on the whole in terms of money market conditions. the deterioration in the funding situation of firms is coming to a halt. however, the stance of investors toward firms with high credit risks remains severe and the lending attitudes of private banks are becoming more cautious. hence, the developments in the behavior of financial institutions and corporate financing continue to require close monitoring.