The lira's value leaped on news of the decision.
There had been indications from the bank that it would raise rates after inflation came in at almost 18 percent in August.
"Accordingly, the Committee has made a decision to implement a strong monetary tightening to support price stability", the monetary policy committee statement said.
The bank described the hike as a "strong monetary tightening to support price stability". The lira has lost roughly 40 percent of its value against the US dollar this year, and its inflation rate sits at about 18 percent.
Phoenix Kalen at Societe Generale said the market was both pleased and confused by the bank's move.
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The news outlets said the report was due to be released September 25 and they obtained it in advance. Protocols for dealing with abuse in the church vary wildly from country to country.
It also said that the "tight stance in monetary policy" would continue until further improvement in the inflation outlook.
The bank must balance concerns over slipping growth, which, although a robust 5.2 per cent in the second quarter on an annual comparison, showed signs of weakness with some analysts predicting Turkey is heading for recession.
The bank´s intervention was the latest aggressive rate hike to calm economic turbulence in an emerging market after the Argentinian central bank´s recent hike from 45 to 60 percent on August 30.
But Erdogan - who has been accused by critics of pressuring the nominally independent central bank - had earlier charged the bank with failing to control inflation and again aired his unorthodox view that low rates bring inflation down.
In one direction it could hear the siren call of investors craving higher interest rates to draw a line in the inflationary sand and stop the lira's collapse.
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"Interest rates are the cause, inflation is the result. If you say 'inflation is cause, the rate is the result, ' you do not know this business, friend". But it still expects to end its 2.6 trillion euro asset purchase scheme by the end of the year, suggesting that a formal decision on ending quantitative easing will come later.
The lira had weakened earlier on Thursday before the central bank decision as Erdogan's fierce criticism of the central bank and high interest raised doubts in investors' minds about how much the bank might tighten policy. They increased the cost of cash to commercial lenders by around 150 basis points last month by forcing them to use a borrowing tool costlier than the one-week repo rate.
He said Turkey also needed to resolve a dispute with the United States, which helped drive the lira to a record low of 7.24 against the dollar a month ago, and rebalance the economy away from big infrastructure projects and consumer spending.
The sense of doom was compounded on August 1, when the USA imposed selective sanctions on Turkey over the detainment of an American pastor.
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