["Journal of Money, Credit and Banking, EarlyView. ", "\nAbstract\nActivity shortfalls are more costly than strong activity. I consider optimal monetary policy under discretion with an asymmetric (shortfalls) loss function in a natural rate model. The optimal monetary policy exacerbates shortfalls, owing to the adjustment of expectations implied by the natural rate hypothesis, and leads to an inflationary bias. Mandating a central bank objective with greater symmetry lowers activity shortfalls and inflation bias. The model also implies that an optimal monetary policy does not accommodate fluctuations from aggregate demand shocks. The analysis implies that monetary accommodation of strong economic activity requires justifications other than asymmetric costs of shortfalls.\n"]