BUCHAREST, Nov 5 (Reuters) - Romania's central bank cut interest rates by a quarter point to a new record low of 4.00 percent at its last meeting of 2013 to support the economy and taking advantage of sharp declines in inflation.
Tuesday's cut was fourth in a row this year and in line with market consensus. Persistently high inflation had kept the central bank on hold for more than a year while its emerging European peers lowered borrowing costs sharply.
But September inflation fell to 1.9 percent from August's 3.7 percent. The central bank's 2013 inflation forecast is at 3.1 percent, within its 1.5-3.5 percent target range.
The bank also approved its quarterly inflation report on Tuesday and will present it in a news conference later this week when a new year-end inflation forecast will be announced. Governor Mugur Isarescu will hold a briefing later in the day.
'We expect the easing cycle to continue down to 3.50 percent,' Unicredit economist Dan Bucsa said.
'The forecast released in the new inflation report might show inflation below 2.5 percent at the end of next year, which would leave scope for further rate cuts and a real interest rate of at least 1 percent.'
The International Monetary Fund has completed its first review of Romania's 4 billion euros aid deal which will focus on the reform of transport and energy sectors, it said on Tuesday.
Romania's economy is expected to grow around 2 percent this year, supported by a good agricultural harvest, but consumption, government and foreign investment remain weak. Next year's growth is seen at 2.2 percent.
The leu was virtually unchanged from levels before the cut, trading flat on the day at 4.415 per euro at 1035 GMT.
(Reporting by Ioana Patran Editing by Jeremy Gaunt) Keywords: ROMANIA RATES/
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