credit risks involved. on the other hand, the improvement in economic activities has not stimulated corporate demand for external funds, since firms ’ cash flow is at a high level in parallel with recovery in profits. moreover, firms continue to reduce their debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant. in view of this, the underlying tone of private banks ’ lending remains sluggish. recently, however, the expansion in the year - to - year decline seems to be ceasing. issuance of corporate bonds and cps has been steady. money stock ( m2 + cds ) grew faster in september compared with the previous month on a year - onyear basis. recently, funding costs for firms are somewhat increasing, due to the rise in money market rates after the termination of the zero interest rate policy. in this financial environment, there seem to be no substantial changes in the lending attitude of financial institutions and easing of corporate financing conditions.

rate for october has declined to 3. 1 percent, a low level last seen in 1995. under this circumstance, upward pressure is being exerted on wages. scheduled cash earnings in the monthly labour survey have been positive on a year - on - year basis for three consecutive quarters since the turn of the year, with base pay being raised for two years in a row ( chart 4 ). private consumption has been resilient, as evidenced by a clear increase on a quarter - on - quarter basis for the july - september quarter against the background of steady improvement in the employment and income situation. that said, a virtuous cycle in both the corporate and household sectors has been maintained in japan ’ s economy. the real gdp growth rate for the july - september quarter was slightly negative for a second consecutive quarter, but this is mainly due to the progress in inventory adjustments, and final demand as a whole has been increasing. turing to the outlook, japan ’ s economy through fiscal 2016 is likely to continue growing at a pace above its potential, which is estimated to be around 0. 5 percent or lower recently. as shown in the outlook for economic activity and prices ( hereafter the outlook report ) released at the end of october, the outlook in terms of the median of the policy board members ’ forecasts of the real gdp growth rate was 1. 2 percent for fiscal 2015 and 1. 4 percent for fiscal 2016. ii. monetary policy and price developments in japan as i have explained, japan ’ s economy is likely to continue growing at a pace above its potential. in this situation, how are prices expected to develop? next, i would like to talk about price developments in japan after touching on the bank ’ s monetary policy. a. change in policy regime the bank is implementing quantitative and qualitative monetary easing ( qqe ) that aims at converting people ’ s deflationary mindset, which has been formed firmly amid the prolonged period of deflation, to one that moderate inflation is to be expected. that is, it is preparing a bis central bankers ’ speeches foundation on which people can act on the assumption that prices will continue to rise moderately. qqe consists of two pillars. the first is a clear commitment under which the bank will achieve the price stability target of 2 percent in terms of the year - on - year rate of change in the consumer price index ( cpi ) at the earliest possible time, with a time horizon of about two years. the second