The broad-based decline was seen as more than enough for the ECB to begin undoing the steepest streak of interest rate hikes in its history, which were a response to spiralling prices in the wake of Russia's invasion of Ukraine.

The European Central Bank is all but certain to cut interest rates from record highs on Thursday and acknowledge it has made progress in its battle against high inflation, while also stressing the fight is not yet over given sticky services prices.

ECB policymakers have clearly telegraphed their intention to lower borrowing costs after seeing inflation in the 20 countries that share the euro fall from more than 10% in late 2022 to just above their 2% target in recent months.

The broad-based decline was seen as more than enough for the ECB to begin undoing the steepest streak of interest rate hikes in its history, which were a response to spiralling prices in the wake of Russia's invasion of Ukraine.

Now, the ECB will join the central banks of Canada, Sweden and Switzerland in cutting rates and moving well ahead of the influential U.S. Federal Reserve.

But what had looked like the start of a major easing cycle only a few weeks ago now appears more uncertain amid signs that inflation may prove stickier than expected in the euro area, as has been the case in the United States.

This means that ECB President Christine Lagarde and her colleagues are unlikely to commit to a further rate reduction at their July meeting or beyond just yet.

Instead, they are expected to stress any further move would depend on incoming data and that borrowing costs need to remain high enough to keep a lid on inflation.

"Further cuts in September and December remain our central case," HSBC economist Fabio Balboni said in a note. "But if the recent resilience in services inflation proves sustained, we see increasing chances that the ECB might have to be more cautious on the way down."