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 financial system is the first link in the monetary policy transmission chain. So far in this monetary tightening episode, how have financial conditions evolved? Has their evolution differed materially from past tightening episodes? If so, how and why? How has real activity responded to date? This Bulletin explores these questions, and thereby serves as an input to calibrate the next steps for monetary policy. First, it documents the recent evolution of financial conditions and compares their patterns with those observed in past tightening episodes. It then turns to the response of real activity and the policy implications.