It has proved powerful in the past, and it is crucial that it continues to do so. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6
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  3  BIS Review 48/2000  economy is considered to be a factor that has contributed to the productivity improvements recorded in the USA.