sales, the ratio of firms ’ current profits to sales has recently reached around 5 percent for all industries and firms of all sizes – a high level that exceeds that prior to the global financial crisis ( chart 7 ). corporate profits are expected to continue to be on an improving trend as falling crude oil prices and the yen ’ s depreciation to date are likely to contribute to pushing up profits. with corporate profits improving, business fixed investment has been on a moderate increasing trend ( chart 8 ). as for the outlook, with corporate profits continuing to be on an improving trend, business fixed investment is likely to continue following a moderate improving trend against the background that ( a ) the sense among firms that they have excess capital has been waning, ( b ) firms are expected to increase labor saving investment due to the tightening of labor market conditions, and ( c ) with the depreciation of the yen, japanese firms appear to have started to increase the share of fixed investment at home. in fact, with regard to the last point, at the meeting of general managers of the bank ’ s branches in january there were reports of cases where firms were increasing their production and fixed investment at domestic bases against the backdrop of the yen ’ s depreciation. production decreased for two consecutive quarters in the april - june quarter and the julyseptember quarter last year, but due in part to subsequent progress in inventory adjustments, it started to increase again in the october - december quarter and continued to increase in january this year ( chart 9 ). against the backdrop of an increase in final demand, production is expected to moderately increase going forward. therefore, with a virtuous cycle from income to spending operating in both the household and corporate sectors, japan ’ s economy has continued its moderate recovery trend. going forward, this virtuous cycle is likely to continue operating with the fall in crude oil prices to date and the government ’ s economic stimulus working as boosting factors, and thus japan ’ s economy is expected to continue its moderate recovery trend. in terms of the bank ’ s policy board members ’ forecasts released in the january interim assessment of the october 2014 outlook report for economic activity and prices ( hereafter the outlook report ), the real gdp growth rate was projected to be minus 0. 5 percent in fiscal 2014, but 2. 1 percent in fiscal 2015, and 1. 6 percent in fiscal 2016 – in other words, it was expected to grow above the potential growth rate, which

headline hicp inflation has been revised down slightly, mainly reflecting the recent appreciation of the euro exchange rate. turning to the monetary analysis, broad money ( m3 ), despite some monthly volatility, continues to expand at a robust pace, with an annual rate of growth of 4. 5 % in july 2017, after 5. 0 % in june. as in previous months, annual growth in m3 was mainly supported by its most liquid components, with the narrow monetary aggregate m1 expanding at an annual rate of 9. 1 % in july 2017, down from 9. 7 % in june. the recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. the annual growth rate of loans to non - financial corporations increased to 2. 4 % in july 2017, up from 2. 0 % in june, while the annual growth rate of loans to households remained stable at 2. 6 %. the pass - through of the monetary policy measures put in place since june 2014 continues to significantly support borrowing conditions for firms and households, access to financing ‒ notably for small and medium - sized enterprises ‒ and credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for a continued very substantial degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below, but close to, 2 %. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively to strengthening the longer - term growth potential and reducing vulnerabilities. the implementation of structural reforms needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area growth potential and productivity. regarding fiscal policies, all countries would benefit from intensifying efforts towards achieving a more growth - friendly composition of public finances. a full, transparent and consistent implementation of the stability and growth pact and of the macroeconomic imbalances procedure over time and across countries remains essential to bolster the resilience of the euro area economy. strengthening economic and monetary union remains a priority. the governing council welcomes the ongoing discussions on further enhancing the institutional architecture of our economic and monetary union. we are now at your disposal for questions 2 / 2 bis central bankers'speeches