15  Figure 6: The channels through which monetary policy tools affect inflation and employment (This diagram shows the different channels through which different tools ultimately end up affecting inflation and employment. It builds on the monetary policy transmission mechanism shown in the Monetary Policy Handbook (p52))  Source: RBNZ.
Lending programs are most effective as backstops when loans are offered at a penalty rate and are of short duration. When appropriately calibrated, lending programs can help promote market functioning but limit the Federal Reserve's overall footprint in financial markets in the longer term.