"Domestic demand was weak and the bank wanted to provide stimulus to the economy by slashing rates," Huseyin Sumer, an economist, told Xinhua.

　　Turkish statistics agency announced earlier this month that the country's economy grew by 2.2 percent in 2012, falling short of the projected 3.2 percent.

　　The central bank has been trying to spur the economy since mid- 2012, starting with a rate cut in December last year. As the first quarter growth is expected to reach 3 percent, the bank moved more aggressively on Tuesday by lowering key interest rate by 50 basis points.

　　However, analysts are concerned that growth comes at the expense of high inflation rate and widening current account deficit (CAD), which have been the chronic problem for the Turkish economy.

　　"The yearly inflation has been estimated at 7.3 percent. It is higher than the central bank's target of 5 percent. This gap is the main constraint on monetary policy," said Seyfettin Gursel, another leading Turkish economist.

　　Moreover, the CAD is expected to grow to over 58 billion U.S. dollars this year, from 47 billion dollars in 2012.

　　According to Gursel, while the growth was almost fully led by net exports last year, it is expected to ride on domestic demand in 2013, which will lead to higher CAD.

　　Turkey's Economy Minister Zafer Caglayan welcomed the central bank's move, saying that it was late but encouraging. "We have long waited for this proactive move to come. If only the bank had taken measures before we saw unemployment jump and growth slow last year."

　　Following the rate slash, the central bank signaled in a written statement that "Ongoing uncertainties regarding the global economy and the volatility in capital flows require the monetary policy to remain flexible in both directions."

　　Economist Yasar Edinc pointed out that the bank does not see the higher inflation as a serious risk at this time considering that the prices of commodities and energy have been on declining curve.

　　"This may change however if the central bank sees a risk in the second quarter and allows appreciation of lira," Edinc said.