The article examines how real interest rates and output gaps in the UK can help policymakers. By using a macroeconomic model, the researchers estimated the natural rate of interest and the real interest rate gap. They found that the real rate gap can predict changes in output and inflation. Interestingly, these predictions were stronger in the 1980s compared to later years. After 1992, when inflation targeting was introduced, the relationship between the real rate gap and output gap improved, but its predictive power for inflation decreased.