ECB preview: strategic review starts (but no further details yet)

We expect no policy announcement to be made at next Thursday ’ s ECB meeting and the overall tone of the press conference to resemble the one from the December meeting . Latest data coming out of th e e uro area are broadly consistent with the ECB’s baseline scenario, signaling no need for an immediate change in the policy stance. We expect Mrs Lagarde to officially announce the start of the strategic review, though we don’t expect to get more information on the process beyond what she already alluded to at the December meeting. One issue on which the meeting could shed more light is a potential change to the tiering of excess liquidity. Judging from the experience so far, the introduction of the tiering system has not led to any dislocation in overnight markets . Mrs Lagarde may therefore signal a general willingness of the ECB to consider additional exemptions for banks at some future point.