The Czech National Bank board will take a cautious approach to further interest rate cuts after launching an easing cycle last month, minutes from the Dec. 21 meeting released on Friday showed.

The central bank delivered a 25 basis-point cut to put the main repo rate at 6.75% at the meeting. The unanimous board decision was the first cut in more than three years, coming amid a backdrop of slowing inflation and a stagnating economy.

"The Board expected inflation to fall significantly in 2024. The time had therefore come to take a careful step towards gradually reducing the key interest rates," minutes from the meeting said.

"However, the Board still saw inflationary risks in the outlook...

"Therefore, the Bank Board considered it necessary to persist with tight monetary policy and approach potential further rate cuts with caution."

The minutes said there was a consensus that the chance of stronger-than-expected repricing activity by companies in January was low due to weak domestic demand. A majority also viewed weak economic performance internationally as an anti-inflationary factor.

On the future path of policy, according to Governor Ales Michl, rates were still safely high above their "steady-state level", the minutes said.

"This would allow the reduction in rates to be halted or interrupted at any time at subsequent meetings if upside risks to inflation were to materialise," the minutes continued.

Vice-Governor Jan Frait also said in the minutes that rates would likely be reduced more slowly than recent forecasts implied.

Board member Tomas Holub said that there was also room to reduce rates by more than 25 basis points in December.

"However, if the baseline scenario of the autumn forecast were to materialise, it would be necessary in his view to cut interest rates more forcefully at future meetings, or else domestic monetary policy would get significantly behind the curve," the minutes said. (Reporting by Jason Hovet; Editing by Nick Macfie)