Romanian parliament set to back longest-serving central bank governor

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BUCHAREST (Reuters) – Romania’s parliament is set to approve on Tuesday the central bank’s new board, led by the world’s longest serving governor, after it won backing from the budget finance committees early in the day.

The Romanian central bank was the last in Central and Eastern Europe to begin cutting rates in July, holding off as fiscal slippage and tax changes slowed a decline in inflation.

Ahead of presidential and parliamentary elections in November and December in the European Union nation, its scope to cut the benchmark rate further is limited by widening budget and current account deficits, which Governor Mugur Isarescu said were a major challenge.

“The objective remains … to lower inflation without causing recession,” Isarescu said during the committee hearings that endorsed him. “Given the size of the fiscal budget deficit, recession is the last thing we need.”

Isarescu, 75, has been in his post since 1990.

The bank’s nine-member board was nominated by parties for a five-year-term based on their parliamentary seat numbers.

Economists Florin Georgescu and Leonardo Badea will stay on as the deputy governors, alongside new deputy Cosmin Marinescu, a former adviser to President Klaus Iohannis.

The bank’s forecasts see inflation falling to 3.4% at end-2025 from 4.0% this December, but uncertainty is high as the government that emerges from the elections will almost certainly need to hike some taxes.

The Romanian leu was 0.01% firmer against the euro at 1200 GMT, unchanged from levels before the committees’ endorsement.