BUCHAREST, July 5 (Reuters) - Romania's central bank kept its benchmark interest rate unchanged at 7.00% as expected on Wednesday and maintained a forecast for inflation to ease back to a single-digit rate during the third quarter.

Most analysts polled by Reuters in June had expected the decision to hold the rate steady for a fourth consecutive monetary policy meeting.

The bank expects annual inflation of 7.1% in December, easing to 4.2% at the end of 2024 - still above its target of 1.5%-3.5%. Inflation stood at 10.64% in May.

Economic growth in the second quarter will be slower than previously forecast, the bank said, but it underlined the continued growth of household consumption and investment in the first quarter.

Analysts have said they expect policymakers to keep rates on hold this year, instead potentially using market liquidity management as a tool to loosen or tighten policy depending on exchange rate developments and inflation readings.

"The central bank is likely to be the last in the region to transition to interest rate cuts, which we expect early next year," Liam Peach, senior emerging markets economist at Capital Economics, said in a statement.

Earlier, ING Bank said market liquidity had been running record surpluses in recent months, "leading to a fall in interbank market rates well below the monetary policy rate".

Borrowing costs are seen on hold throughout 2023 before falling to 6.5% by the end of the first quarter of next year, the Reuters poll showed.

Central bank Governor Isarescu has said rate cuts are unlikely until interest rate levels and inflation converge. He has also said a firmer leu currency would not help lower inflation in a sustainable manner.

The leu was flat against the euro following Wednesday's policy decision. (Reporting by Luiza Ilie Editing by Helen Popper)