Given the institutional policy of the ECB, the obvious point in time to tighten the policy stance is when, based on the analysis of the outlook for economic activity and inflation, there is evidence of emerging upside risks to price stability. At that stage, the interest rate should be increased at the pace necessary to ensure price stability in the medium term.
However, identifying the right moment in time to start a tightening phase is difficult under normal conditions and even more so when the assessment of risks is, as in the current environment, surrounded by heightened uncertainty.