##tails less headroom to provide stimulus in recessions with low inflation, further lowering inflation expectations, and so it continues. in this setting of historically low natural rates, a loss of interest rate policy scope and risk of a deanchoring of inflation expectations, the major central banks have deemed it necessary to rethink their monetary policy strategy, i. e. how they express their monetary policy targets and how they pursue them with the tools available. to date, under their strategic frameworks, most central banks have followed variants of what is known as inflation targeting, which entails targeting an inflation rate that is close to a specific number ( for example, 2 % ) over a medium - term horizon. yet alternative monetary policy strategies exist under which central banks attempt to make up for past deviations of inflation from its target. these are the so - called make - up strategies, 12 one of which is known as price - level targeting. in this case, the central bank announces a target growth rate for the price level ( for example 2 % ). unlike under inflation targeting, should inflation temporarily fall below 2 % for any reason, the central bank will have to ensure that it rises above 2 % in the future so that the price level returns to its target path. this strategy requires the central bank to correct in the future any past inflation deviation from the value consistent with its price - level target. a strategy that is less radical, albeit similar in spirit, is known as average inflation targeting. in this case, the central bank attempts to keep average inflation at its target level over a given period. unlike traditional inflation targeting, it includes a component to make up for past deviations from the target set, but only over a specific period of time. this contrasts with price - level targeting, where all past deviations must be made up for, regardless of how long ago they occurred. it is sometimes pointed out that one of the problems with make - up strategies is that their strict symmetric application may create problems for the credibility of the strategy. for example, if there is a commitment by the central bank to react equally to both inflation undershooting – which, as we have seen, are the really problematic deviations in the current context – and overshooting, we could find that, following a period of above - target inflation the central bank would have to reduce inflation below the target, which would require depressing economic activity and employment. given that such a commitment may not be entirely credible, it has

recently been proposed that such strategies be temporary. in other words, the central bank operates normally within a traditional inflation targeting framework, but, in the event of a low inflation crisis driving see banco de espana ( 2020a ) for a detailed discussion of make - up strategies. interest rates close to their lower bound, it commits to a make - up strategy to recover the “ lost inflation ” over that period in the future. 13 against this background, in late august 2020 the federal reserve announced the main findings of its strategic review. among other changes, it has adopted a new asymmetric average inflation targeting strategy, albeit without specifying some of the parameters of this strategy, such as the length of the period over which the average inflation to be stabilised is calculated. in particular, in its new strategic framework the federal reserve affirms that in response to periods when inflation has been running persistently below 2 %, it will aim to keep inflation moderately above 2 % for some time. 14 this asymmetry in the federal reserve ’ s response to the undershooting of the average inflation target ( with a relatively stronger expansionary response ) as opposed to overshooting ( which the federal reserve promises to tolerate temporarily ) is an attempt to address precisely the credibility problems referred to above. in january 2020 the ecb announced the launch of its monetary policy strategy review. the outbreak of covid - 19 has delayed this process, which is now expected to be concluded later this year. given that this process is ongoing, the conclusions are as yet unknown. however, i can say that that the outcome is open ; both the ecb and the eurosystem ’ s national central banks are conducting a great deal of analysis and are seeking the opinions of civil society, academic economists and other professional and social groups. the ecb ’ s strategy review is very ambitious ; not only does it analyse matters such as possibly adopting strategies involving making up for past deviations of inflation from its target, but it also addresses additional topics such as the design and optimal use of the various monetary policy tools ; the measurement of inflation ; the interactions between monetary policy and macroprudential policy ; the institution ’ s communication policy ; and the impact of climate change, digitalisation and globalisation on monetary policy. all these facets and others covered by the strategic review may be relevant when delivering on our price stability mandate. indeed, one of this review ’ s key aspects will be the definition of the ecb ’ s price