Italy says ECB should cut rates more to address euro zone stagnation

ROME (Reuters) -The European Central Bank (ECB) should resume cutting interest rates to revive a near-stagnant euro zone economy, Italian Economy Minister Giancarlo Giorgetti said in the government's multi-year budget plan.

The ECB left its key deposit rate unchanged at 2.0% last month as expected, and maintained an upbeat view on growth and inflation, dampening expectations for any further cut in borrowing costs.

"The overall stagnation of the European economy suggests that, while complying with the ECB's mandate, a more accommodative interest rate environment would be desirable," Giorgetti wrote in the budget document seen by Reuters.

Italy's budget plan approved by the cabinet late on Thursday estimated that interest spending on the public debt will rise from 3.9% of GDP in 2025 and 2026 to 4.1% in 2027 and 4.3% in 2028.

The debt -- the second highest in the euro zone after Greece's -- is targeted at 136.2% of gross domestic product this year from 134.9% in 2024, and seen rising further to 137.4% in 2026.

It will then decline marginally to 137.3% in 2027 and 136.4% in 2028 when it will still be above this year's level, according to the budget document seen by Reuters.

(Reporting by Giuseppe Fonte, editing by Gavin Jones)