Non-Accelerating Inflation Rate of Unemployment - Investment & Finance Definition
The rate of unemployment that can’t be avoided without causing the inflation rate to rise. NAIRU is said to be the “natural” rate of unemployment, meaning that some people always are going to be unemployed because they have gone back to school, are raising a family, or taking a break from work. They also may have secured another job but haven’t started it yet. There are various theories about what NAIRU is. At one time it was thought to be about 5 percent. However, that theory was disposed of after the unemployment rate went below 4 percent during the stock market and technology boom of the late 1990s and no increase in inflation was seen. Determining what NAIRU is has been a topic of discussion among Federal Reserve policy makers over a long period of time.