different environments : one in which it is difficult to make profits, and the other in which an adequate return can be anticipated by investing with the use of loans. of the two cases, the latter provides a larger economic stimulus. monetary easing effects in japan are expected to strengthen further in the future, considering that economic conditions and prices are heading toward improvement. third, financial markets remain extremely stable compared to other countries, as market participants have been reassured by ample fund provision. reassuring firms and households about their funding plays a role in supporting their confidence, especially at a time when we are witnessing high uncertainty at home and abroad, particularly with regard to the european debt problem. iii. some points about monetary policy so far, i have explained the bank ’ s powerful monetary easing and its effects. in the conduct of monetary policy, we recognize that there are different opinions. one opinion is that the bank should pursue more aggressive easing. another is that it is too risky to embark on such aggressive measures. for our part, we listen to these opinions and conduct monetary policy as we judge most appropriate. bearing these differences in mind, let me explain our thinking behind the conduct of monetary policy in order to facilitate better understanding of our policy making. level of the “ price stability goal in the medium to long term ” the first is the level of the price stability goal. the general public ’ s perception of prices is deeply ingrained and it influences their actions ; thus, it is hard to imagine a situation that does not take account of experiences over the decades ( chart 5 ). although the year - on - year rate of change in the cpi turned negative in 1998, the average rate of inflation since the middle of the 1980s – after the effect of the second oil shock dissipated – is nearly 0. 5 percent. it has consistently been lower than the equivalent rates in overseas economies. during the bubble period ( 1987 – 89 ) when the economy was booming, the cpi inflation was 1. 3 percent. over the last 30 years or so, there were only three cases when the year - on - year rate of change in the cpi reached 2 percent. the first was at the beginning of the 1990s, when the remnants of the bubble were still in place. the second was bis central bankers ’ speeches in 1997, when the consumption tax was lifted. the third was in 2008, when the sharp rise in energy and food prices hit the household sector. notwithstanding these past benchmarks, simply announcing out of the blue that the bank aims

level accumulation of private - sector debt, their downtrend may become more evident amid the spreading effects of the weaker - than - expected economic growth in the united states and china. in this environment, japan ’ s real exports for the april - june quarter of 2015 turned negative on a quarter - on - quarter basis for the first time in three quarters, registering minus 3. 6 percent, and i consider that this has become one of the factors behind the weaker - thanexpected real gdp growth rate for the april - june quarter – that is, the temporary lull in the economy. real exports are expected to increase on a quarter - on - quarter basis in the julyseptember quarter, albeit moderately. thereafter, however, they are likely to continue to lack momentum for some time and overall economic growth is expected to be quite modest as a result of the adverse effects on production and employment in manufacturing. c. growth expectations and business fixed investment business fixed investment has continued to be on an increasing trend on the back of improvement for the situation in corporate profits and of higher capacity utilization rates. however, firms ’ cautious investment stance still has not changed considerably, particularly in terms of business fixed investment in japan. this seems contrary to firms ’ active stance toward hiring new employees, due in part to strong concern over future labor shortages. in this situation, for firms to become more active in their fixed investment, it is essential to bring about a clear rise in medium - to long - term growth expectations – underpinned as well by the government's growth strategy and measures to respond to the population decline. meanwhile, focusing on the capital stock cycle of business fixed investment, i consider that fixed investment is likely to increase in fiscal 2015, and thereafter the pace of increase is likely to generally peak out toward fiscal 2017, on the assumption that the current growth expectations will be maintained. d. expectations of price rises and private consumption private consumption has continued to lack momentum, despite the favorable environment evidenced by such factors as improvement in the employment and income situation and accommodative financial conditions. one factor behind this may be consumers ’ expectations of price rises for the time being. since april 2015 in particular, a rise in prices of daily necessities such as food has been widely observed. in my view, comments by respondents in the recent economy watchers survey and the sluggishness in the consumer confidence index in the consumer confidence survey are evidence that this rise has negatively affected consumer sentiment.