Italy says ECB must cut more levels to overcome the stagnation of the Euro zone

The European Central Bank (ECB) must continue to cut interest rates to revive the Euro zone economy which is almost stagnant, Italian economy Minister Giancarlo Giorgetti said in the government’s multi-year budget plan.

The ECB left the key deposit rate unchanged at 2.0% last month as expected, and maintains an optimistic view of growth and inflation, reducing expectations for further cutting in loan costs.

“The overall stagnation of the European economy shows that, while obeying the ECB mandate, the more accommodative interest rate environment will be desired,” Giorgetti wrote in the budget document seen by Reuters.

The Italian budget plan approved by the cabinet on Thursday night estimates that interest expenditure on public debt will increase from 3.9% from GDP in 2025 and 2026 to 4.1% in 2027 and 4.3% in 2028.

Debt – The second highest in the Euro zone after Greece – is targeted at 136.2% of this year’s gross domestic product from 134.9% in 2024, and is seen up further to 137.4% in 2026.

This will then decrease slightly to 137.3% in 2027 and 136.4% in 2028 when it is still above this year’s level, according to the budget documents seen by Reuters.
Source: Reuters