Romanian parliament keeps longest-serving central bank governor in post

BUCHAREST (Reuters) -Romania's parliament on Tuesday approved the central bank's new board, led by the world's longest serving governor Mugur Isarescu, who said the main challenge for the European Union state would be lowering a ballooning budget deficit.

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 Romania, its scope to cut the benchmark rate further is limited by widening budget and current account deficits.

"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 with the exception of a one-year stint as prime minister.

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 current forecasts have inflation falling back within target 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 flat on the day against the euro at 1500 GMT.

(Reporting by Luiza Ilie; Editing by Barbara Lewis and Alexandra Hudson)