Goegraphical immobility of labour causes unemployment, so does economical activity in undesirable areas meaning that people cannot move out of those areas (as they cant afford too) to areas where there are jobs.
Also it takes time for jobs to be filled i.e. recreuitment process and structural unemployment occurs i.e. industrys decline and new industries open all the time.
High interest rates bring inflation down, but low interest rates increase inflation (but only in the long run)