Consider the following scenario. You are a member of the Monetary Policy Committee for the Bank of Japan. The staff of the Bank of Japan has just produced a forecast of inflation in Japan for you. If inflation gets too high, you must tighten monetary policy. IF inflation gets too low, you must loosen monetary policy. Japan has a history of debilitating deflation and the Bank of Japan wants to avoid that at all costs. As such, the Committee would rather that you gave them a forecast of inflation that was too low than one that was too high. The appropriate loss function is: Asymmetric with higher penalties for forecasting inflation that is too high Symmetric with equal penalties for forecasting inflation that is too high or too low O Asymmetric with lower penalties for forecasting inflation that is too high Symmetric with higher penalties for forecasting inflation that is too low