* Sees 2013 inflation at 3.2 pct, from previous 3.5
* Has said will soon start rate cutting cycle
BUCHAREST May 8 Romania's central bank cut its
2013 inflation forecast on Wednesday and paved the way for
interest rate cuts in the second half of the year to help a
Persistently high inflation, at 5.3 percent in March, has
prevented Romania's central bank from following its neighbours
in cutting rates to help the European Union's second-poorest
economy, which grew 0.7 percent last year.
The bank last week left its main interest rate
on hold at a record low 5.25 percent for a ninth successive
meeting but said it would soon start to lower borrowing costs as
stubbornly above-target inflation eased.
"We have relatively good news about price developments,"
Governor Mugur Isarescu told reporters. "We now see inflation on
a downward path, one more pronounced that previously expected."
The central bank now expects 2013 inflation at 3.2 percent,
within its 1.5-3.5 percent band and compared with a previous
forecast of 3.5 percent. It sees inflation of 3.3 percent in
2014, from a previous 3.2 percent.
Bucharest is seeking to complete a 5 billion euro
International Monetary Fund agreement in June and though it has
not drawn on the funds, the deal has propped up the leu currency
and helped keep government borrowing costs in check.
Analysts now expect rate cuts in the second half and some
say the first easing could come at the central bank's next
scheduled meeting on July 1.
The leu's 3 percent rise against the euro this year
- which Isarescu said was "pronounced but not
exaggerated" - may also give the central bank, which targets
inflation in a band of 1.5-3.5 percent, space to ease policy.