Capital inflows a risk to Romania inflation outlook: central bank

BUCHAREST Tue Feb 4, 2014 9:08am EST

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BUCHAREST Feb 4 (Reuters) - Volatile capital inflows are a risk to Romania's inflation outlook, central bank Governor Mugur Isarescu said on Tuesday, after the bank cut rates to a record low of 3.5 percent.

The bank cut its benchmark rate by 25 basis points, which will probably be the last cut this year, defying pressure on emerging market policymakers to bolster currencies against turbulence.

"Risks to the new (inflation) outlook are tied to the volatility of capital flows, given investors' changeable risk appetite and changes in exposure to emerging economies," Isarescu told a news conference.

Monetary policy will be focused on Romania's inflation rate, Isarescu said, adding that the current rates were "well-positioned".

Consumer prices fell to an all-time low of 1.6 percent in December, within the central bank's 1.5-3.5 percent target, helped by an exceptional harvest. (Reporting by Luiza Ilie; writing by Radu Marinas; editing by Matthias Williams)

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