. the real gdp growth rate for the july - september quarter of 2015 increased by an annualized quarter - on - quarter growth rate of 1. 4 percent, which exceeds the potential growth, due mainly to an increase in domestic private demand. that for the octoberdecember quarter registered minus 1. 1 percent on an annualized quarter - on - quarter basis, due partly to the effects of irregularly warm weather. as for the outlook, although the sluggishness in exports and production will probably remain for some time, domestic demand is likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both the household and corporate sectors, and exports are expected to increase moderately on the back of emerging economies moving out of their deceleration phase. thus, japan ’ s economy is likely to be on a moderate expanding trend. specifically, the economy is expected to continue growing at a pace above its potential through fiscal 2016. thereafter, through fiscal 2017, it is projected to maintain its positive growth, although with a slowing in its pace to around a level somewhat below the potential growth rate, due mainly to the effects of a front - loaded increase and subsequent decline in demand prior to and after the consumption tax hike planned in april 2017. according to the bank ’ s january 2016 outlook for economic activity and prices ( hereafter the outlook report ), the medians of the policy board members ’ forecasts for the economic growth rate – 1. 1 percent for fiscal 2015, 1. 5 percent for fiscal 2016, and 0. 3 percent for fiscal 2017 – were more or less unchanged from the forecasts presented in october 2015. 2. prices next, i will talk about price developments. the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food has generally been about 0 percent, with the decline in energy prices and the increase in non - energy prices broadly offsetting each other. the rate of change for all items less fresh food and energy – one of the indicators that capture the underlying trend in the cpi – has remained positive for 28 months and has been at a level above 1 percent recently. in addition, looking at annual price changes in all cpi bis central bankers ’ speeches items less fresh food, the share of price - increasing items minus the share of price - decreasing items has shown a marked increase since spring 2015, albeit with some fluctuations. with regard to the outlook, the year - on

- year rate of change in the cpi for all items less fresh food is likely to be about 0 percent for the time being, due to the effects of the decline in energy prices, and, as the underlying trend in inflation steadily rises, accelerate toward 2 percent. meanwhile, assuming that crude oil prices will rise moderately from the recent level, it is likely that the negative contribution of energy prices to the year - on - year rate of change in the cpi will decrease gradually. based on this assumption, the timing of the yearon - year rate of change in the cpi reaching around 2 percent – the price stability target – is projected to be around the first half of fiscal 2017. specifically, the medians of the policy board members ’ forecasts of the year - on - year rate of increase in the cpi for all items less fresh food presented in the january 2016 outlook report were 0. 1 percent for fiscal 2015, 0. 8 percent for fiscal 2016, and, on a basis excluding the direct effects of the scheduled consumption tax hike, 1. 8 percent for fiscal 2017. comparing these with the forecasts presented in october 2015, that for fiscal 2016 is lower and that for fiscal 2017 is more or less unchanged. the downward revision of the forecast for the cpi is due to the assumption of lower crude oil prices. 1 ii. keys to assessing the outlook for economic activity and prices in what follows, i will discuss the keys to assessing the outlook for economic activity and prices in japan, including several points that i think deserve particular attention in terms of realizing the outlook that i mentioned earlier. a. employment and income situation first, i will talk about developments in the employment and income situation. supply - demand conditions in the labor market have continued to improve steadily, and employee income has increased moderately. according to the labour force survey, the number of employees has been increasing, and the labor force participation of women and the elderly has been rising. against this backdrop, the active job openings - to - applicants ratio has risen steadily and a perception of labor shortage suggested by the diffusion index for employment conditions ( the proportion of firms responding that employment was “ excessive ” minus the proportion of those responding that employment was “ insufficient ” ) in the december 2015 tankan ( shortterm economic survey of enterprises in japan ) has heightened. the unemployment rate has declined moderately, albeit with some fluctuations, and recently has been in the range of 3. 0 – 3. 5 percent. the supply - demand conditions in the labor