However, if the natural rate is not measured precisely and is simply replaced by its estimate in the above rule, then “estimation error becomes policy error, and stabilization policy becomes destabilizing”. 16 One therefore has to explore what the optimal monetary policy looks like in the presence of measurement uncertainties concerning the natural rate.
This is one instance of the general question of how monetary policy should act in presence of uncertainty about the state of the economy and this issue currently constitutes a very active research area.