of higher productivity growth. this can lead to financial imbalances and exaggerated indebtedness heightened by high share prices and increasing property prices. earlier periods with strong credit expansion and high demand in swedish economy have been followed by rising inflation. low inflation expectations and price - dampening effects from deregulations can now for a time hold back the inflationary pressure that builds up when resource use in the economy increases. low inflation combined with high growth can per se strengthen the concept that earlier patterns have been broken away from in the long term and we have entered a period with long - term higher growth. if demand increases so much that resources are put under pressure, however, inflation will sooner or later accelerate. there is a risk that prices then will increase very quickly and that inflation expectations will also increase. to get inflation in line with the target in that situation, it may be necessary to conduct a stringent monetary policy for a longer period. if expectations of future growth prospects at the same time are interrupted, a need for consolidation can arise in the household and business sector, which will strongly dampen growth. the consequences of altogether too strong growth now could therefore be instability in inflation and production later. if the financial imbalances have become altogether too great, there is a risk that the consequences will not be limited to great variations in growth and inflation but will even lead to lower overall production. the same course of development as in the usa? as we have said, it is incontestable that the swedish economy has functioned better than before. however, there is a risk that we will overshoot. the exceptionally long upswing in the usa has contributed to strengthening expectations on faster long - term growth in sweden as well. there are certain developmental features in the swedish economy that are reminiscent of the american economy which could indicate that. an important basis for the favourable development in the usa is probably the approach to budget consolidation and price stability that has guided economic policy there for a long time. and in those areas we have had a similar development in sweden although the process started later here. at the same time, the strong penetration of information technology in the american economy is considered to be a factor that has contributed to the productivity improvements recorded in the usa. as regards information technology, we are well to the fore, although it is first recently that statistics indicate some increase in productivity growth. expectations for a continued strong increase in productivity in the usa have also been a basis for the strong rise on the american stock

##ulating at the same time must in my view therefore be taken into account in the monetary policy decisions. a development that i described earlier can be the consequence if the expansion of demand and credit continue to increase at a high rate. the quantity of money and lending, especially to households, are for instance increasing at present at a rate which is probably not sustainable in the long term. the advantages of simple rules for decision - making are that they are easy to explain which can be especially important when establishing credibility for a low - inflation regime. with simple rules for action, it becomes clear what has guided monetary policy decisions. however, as i have shown, this does not necessarily result in optimal policy in every situation in the sense that macroeconomic stability and longer - term price stability are achieved. the difficulties in assessing when demand and the increase in lending are too strong are certainly considerable although this applies by and large to all the assessments we have to make.