Euro zone lending continued to stagnate in March and consumers trimmed their inflation expectations as record-high borrowing costs kept putting the brakes on the euro zone's economy, European Central Bank (ECB) reports showed on Friday.

Fabio Panetta, head of Italy’s central bank, said in a speech on Thursday that if the Fed keeps rates on hold longer than markets expect, or even raises them, it would be “likely to reinforce the case for a rate cut [by the ECB] rather than weakening it”.

The ECB has essentially promised a rate cut at its next policy meeting on June 6 but policymakers are still debating the rate path beyond that and signals from the U.S Federal Reserve that its own easing could be delayed clouds the outlook further.

The European Central Bank can’t commit to what will happen after a likely first reduction in borrowing costs in June, according to Governing Council member Joachim Nagel.

The ECB will take account of the Fed’s progress in lowering inflation when it decides the pace of cuts to its key interest rate after a first move in June, its vice president said in an interview.

European Central Bank policymaker Fabio Panetta called on Thursday for timely and small interest rate cuts to stem the risk of prolonged economic stagnation in the euro area.