While no central bank has an objective for the unemployment rate as a part of its strategy8, the deviation of unemployment from the non-accelerating inflation rate of unemployment (NAIRU) plays an important role in the inflation process, as suggested by standard Phillips curve analysis.
Achieving an unemployment rate equal to the NAIRU is therefore commonly seen as essential for stabilising inflation even if the central bank has no objective for unemployment.9 Indeed, one way to think of the central bank's problem in to set interest rates to influence aggregate demand, as captured by the unemployment rate, in such as a way as to control inflation.