We examine how sector-specific financial frictions and production network linkages shape monetary policy transmission. Using granular country-sector data for the euro area we construct novel measures of upstream and downstream financial frictions. Panel local projections show that financial frictions among upstream suppliers and downstream customers substantially amplify the effects of monetary policy on prices and output. Importantly, this amplification is not driven solely by a sector's own financial position: indirect financial frictions transmitted through production networks account for a significant share of the response. We further document that downstream financial frictions reinforce the contractionary effects of monetary policy through a demand channel, while upstream financial frictions generate a countervailing cost channel by raising sectoral prices. A multi-sector model with heterogeneous financial frictions rationalizes these findings and highlights the importance of network-based financial channels for monetary policy transmission.