Despite clear signals that the 17-nation economy remained stuck in recession during the first quarter, the European Central Bank resisted an interest rate cut in April likely due to concerns over falling bank lending.

The main refinancing rate was kept at 0.75 percent for the ninth straight month after the meeting of the Governing Council in Frankfurt on Thursday, in line with economists' expectations. The previous change in interest rates was a quarter-point reduction in July 2012.

The central bank also left the deposit rate unchanged at zero and the marginal lending facility rate at 1.50 percent.

ECB President Mario Draghi is set to hold his customary post-decision press conference at 8.30 am ET when markets would be keenly watching his comments for any hint of policy easing in coming months. He is also likely to face lot of questions on the Cyprus bailout that penalized bank depositors for the first time in the Eurozone sovereign debt crisis.

"When assessing possible policy options to stimulate the economy, the ECB faces a new dilemma: choosing a rather ineffective but politically acceptable rate cut or an effective but politically controversial lending bazooka," ING Bank Economist Carsten Brzeski said earlier this week.

ECB maintained status quo on a day when its Japanese counterpart unleashed an aggressive monetary easing program as the newly appointed Bank of Japan Governor Haruhiko Kuroda began his campaign to reverse 15 years of deflation which has been a drag on the economy.

Meanwhile, inflation in the euro area weakened for the third consecutive month in March as a marked deceleration in energy prices more than offset faster growth in service costs. The figure eased to 1.7 percent from 1.8 percent in February, initial estimates from Eurostat showed yesterday.

Draghi could still bolster confidence slightly by hinting at future unconventional policy support and suggest some concrete plans to get finance to SMEs and pledge continued support for the banking sector, Capital Economics Senior European Economist Jennifer McKeown said.

"However, he is likely to reiterate that any sovereign bond purchases will come only after the government in question has applied for an EU bail-out and accepted the associated strict fiscal conditions," she added.

"Accordingly, doubts over the ECB's willingness to do "whatever it takes" to save the euro seem likely to grow."

Recent economic indicators for the currency-bloc paint a bleak picture. Survey data from Markit Economics released today showed that the euro area private sector downturn intensified in March as the German economy reached a near-stagnation level.

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