Financial conditions refer to the overall state of the economy as it relates to the availability of money and credit. These conditions can influence how easily individuals and businesses can borrow money, invest, and spend. Key factors include interest rates, inflation, and the health of financial institutions. Central banks, like the Federal Reserve, often monitor and adjust financial conditions to promote economic stability. When financial conditions are loose, borrowing is easier, which can stimulate growth. Conversely, tight financial conditions can restrict access to credit, potentially slowing down economic activity.