Financial frictions can affect how a central bank balances controlling inflation and stabilizing the economy. When there are financial issues, the central bank may need to focus more on keeping inflation steady, even if it means allowing more ups and downs in the economy. By adjusting interest rates based on inflation and past rates, the central bank can try to find the right balance. But when financial problems get worse, this strategy may not work as well. Including a measure of lending costs in the central bank's decision-making can help offset the negative effects of financial issues on the economy. This means that even if the central bank isn't directly trying to fix financial problems, considering lending costs in their decisions can still help keep the economy stable.