Turkey's central bank  shaved 0.5 percentage points off its benchmark interest rate, resisting vehement government pressure for more aggressive easing ahead of presidential elections in August.

The bank cut its one week repurchase rate to 8.25% from 8.75%, saying that a "measured cut" was appropriate in the current economic situation.

The bank also lowered overnight borrowing rate from 8.0% to 7.5%.

But it was not clear if the relatively modest cut will be enough to satisfy Prime Minister Recep Tayyip Erdogan, who has demanded sharper reductions to stimulate growth as he prepares to stand in the presidential polls.

The central bank, which is nominally independent, had sharply raised key rates in January in response to a steep drop in the lira.

At the time, it raised the one-week repurchase rate from 4.5% to 10%. Mr Erdogan's supporters in the government have called in recent weeks for the rates to be slashed back again.

But the bank indicated that the time was not right for an aggressive cut to pre-January levels because inflation remained high.

"Inflation expectations, pricing behaviour and other factors that affect inflation will be closely monitored and the tight monetary policy stance will be maintained," it said.

The Turkish lira strengthened slightly against the dollar after the announcement, with markets apparently heartened the bank was still showing a degree of independence.

At its last meeting on June 24, the bank had cut the benchmark rate by 0.75 percentage points, a move that met with only a very lukewarm approval by the government.