We have felt some concern that the credit expansion and increases in property prices could go too far, with the risk that demand might fall sharply if there is an adjustment further ahead. However, these risks are difficult to quantify and they may lie far in the future. In this way, they do not easily fit into our usual analysis and forecasting work. We Executive Board members have nevertheless considered in our discussions that we should in some way take these risks into account, and this has been one of the pieces of the puzzle that explains our recent actions. In practice, it is often difficult to estimate how lasting various structural changes and other economic developments will be. For example, both the Riksbank and other forecasters have been uncertain as to whether the strong productivity in recent years has been temporary or a more lasting change. Conducting monetary policy that has substantial stabilisation policy ambitions could thus risk reinforcing cyclical fluctuations rather than subduing them. The conditions for succeeding with an active monetary policy are also complicated in practice since it takes time before the full effects of interest rate adjustments are visible. One therefore should not expect monetary policy to be able to fine tune economic activity to any great extent. There are also other reasons that limit the ambition to stabilise the real economy. The flexible application of our monetary policy must not diminish confidence in the inflation target.
With respect to welfare benefits, the Stability Programme reflects the 1.6% settlement for the revaluation of public pensions, both in 2018 and 2019. This increase will be 3% this year, 2018, in the case of minimum and non-contributory pensions. I shall later return to this. In any event, given the trend growth in the number of pensions and the substitution effect arising from the new pensions replacing those that are terminated, which are generally higher than was earlier the case, the forecast growth in the budget earmarked for welfare benefits in 2018 (3.7%) may also be surpassed. Among the remaining expenditure items for this year, goods and services purchases will notably continue to be contained, and interest payments to decline, while there will be a significant increase in public investment. This latter development is partly in response to the inclusion in 2018 of the expenditure associated with amounts for which the government may be liable under the insolvency-related legal proceedings currently affecting certain toll motorways. But even after adjusting for this effect, public investment is expected to be more expansionary than other items, as was the case in 2017. All told, public investment is expected to stand at 2.1% of GDP in 2018, excluding the temporary effect arising from the above-mentioning legal proceedings, a level far below the average for the previous two decades, which was 3.6%. Overall, it may be concluded that the attainment of the budget deficit target for this year, namely 2.2% of GDP, is subject to significant risks.