ANKARA

 The Central Bank of Turkey said in a statement released on Tuesday that it would cut interest rates "on a measured scale."

The bank's Monetary Policy Committee published the minutes of its last meeting, and stressed that it would apply caution in cutting interest rates in the future. 

At that meeting on Feb. 24, the bank cut its benchmark interest rate to 7.25 percent from 7.50 percent, and the overnight lending rate to 10.75 percent from 11.25 percent.

Explaining its decision, the Monetary Policy Committee minutes said that weak growth combined with a decline in core inflation were behind the rate cuts. 

"Data announced for the final quarter of 2014 point to a limited recovery for economic activity. Industrial production increased 1.2 percent in December, but fell by 0.5 percent quarter-on-quarter due to the volatility in market of some transport vehicles and the activities on the Feast of the Sacrifice (Eid al Adha). The dampening effects of the weak external demand have become more evident, while domestic demand has yet to accelerate adequately, which keeps economic activity from a robust recovery," the bank said.

Citing the success of the ongoing cautious monetary policy, along with prudent fiscal and macroprudential policies, on inflation, especially on inflation excluding energy and food (core inflation indicators). In this regard, the Committee anticipates that core inflation will continue to decline. Moreover, lower level of commodity prices, particularly oil, continue to support disinflation, the minutes said.

The comittee stressed the link between inflation outlook and interest rate cuts. "A persistent decrease in inflation will contribute to the fall in long-term real interest rates by leading to declines in risk and inflation premia. These developments will have a favorable impact on public balance and potential growth. In this context, a more persistent reduction in inflation necessitates a cautious approach in monetary policy," the minutes said.

 Caution would be the keynote in future monetary policy. "Taking into account the heightened volatility in food and energy prices, the Committee cut the interest rates but with a cautious approach kept the rate cuts at a measured scale. Future monetary policy decisions will be conditional on the improvements in the inflation outlook," the bank said.

Government officials have repeatedly criticized the central bank for its cautious approach to interest rate cuts. The government have stated that the bank's tight monetary policy is limiting growth.