Euro zone inflation steady ahead of ECB meeting

Euro zone inflation held steady in June, meeting expectations, but remained well below the European Central Bank's (ECB) target of around 2 percent.

Consumer prices rose by 0.5 percent year-on-year in June, according to official statistics released by Eurostat Monday, flat from May's figure. Before this year, the last time inflation was at 0.5 percent was in November 2009.

Low inflation has dogged the euro zone's stuttering economic recovery, and has led to concerns the region could be heading towards a period of deflation.

Read MoreDraghi breaks new ground with negative interest rate

Last month, in an effort to combat growth-sapping disinflation, the European Central Bank (ECB) took the unprecedented step of imposing a negative interest rate on banks for their deposits—in effect charging lenders to park money with it. The move was part of a package of measures designed to boost the euro zone's economy, which grew by just 0.2 percent in the first three months of the year, quarter-on-quarter.

The ECB's Governing Council will announce its latest monetary policy decision on Thursday.

Janet Henry, chief European economist at HSBC, said the inflation figure for June was "actually quite low". She flagged that Germany's rate of inflation, published Friday, had come in stronger than expected, boosting expectations of a higher euro zone inflation print.

"This number reminds us that the inflation numbers are still coming in lower than expected in the case of the euro zone," she told CNBC. "In the coming months we're going to have to see how the ECB's current policies work, but for the moment the markets will be saying actually the ECB is going to have to do more."

The ECB eases and the euro… rises?

Separate data for the euro zone, also published Monday, revealed that lending to businesses increased slightly more than expected last month.

Annual growth in M3 – a broad measure of cash in the economy – hit 1 percent in May, higher than the 0.8 percent expected by analysts. The latest figure will be welcomed, although it remains well below the ECB's old reference rate of 4.5 percent.

Low money supply in the euro zone is concerning, as lending is a sign of a buoyant economy and spurs spending, business investment and job creation. During the boom times of 2007, M3 annual growth was closer to 12 percent.

Read MoreECB QE and rate tweaks 'on the table': Constancio

Following May's substantial stimulus package, few analysts expect any further policy moves to be announced by central bank head Mario Draghi on Thursday.

However, last month, ECB Vice-President Vitor Constancio told CNBC the central bank could still conduct Federal Reserve-style asset purchases and tweak key rates even further.

Vitor Constancio said that suggestions by Draghi that the central bank was preparing to buy private sector assets were no "bluff".

—By CNBC's Katrina Bishop