Hence the concept that there is an unemployment rate at which inflation is neither rising nor falling – the NAIRU. [10] But while the NAIRU is an important concept, it is only one of the ways the Bank assesses whether it is meeting its full employment objective.
[11] Because we cannot observe the NAIRU or full employment more generally, we use statistical models to infer how much spare capacity is in the labour market at any point in time, based on the signals we are getting from indicators like the unemployment rate, wages and inflation.