Monetary policy, financial conditions and real activity: is this time different?

Key takeaways

• During the current monetary policy tightening episode, financial conditions co-moved closely with policy rates, especially in the initial stages but with some differentiation across countries.
• For advanced economies, the tightening of financial conditions was stronger this time than in the past, while its full impact on real activity appears to be taking longer than usual.
• Financial conditions may continue tightening long after central banks stop raising policy rates, with possible implications for financial stability.

The views expressed in this publication are those of the authors and not necessarily those of the BIS.