The bank's policy committee repeated it is ready to raise rates further as needed to curb inflation, which climbed to an annual rate of 61.53% in September and is expected to rise into next year.
The one-week policy repo rate has risen by 2,650 basis points since June and most analysts anticipate more tightening ahead in order to narrow the gap with inflation.
The bank "decided to continue the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behaviour," it said.
The lira was little changed at 28.13 against the dollar after the announcement. It has weakened some 70% in two years, largely due to President Tayyip Erdogan's long-standing opposition to high rates and influence over the central bank.
In a Reuters poll, most economists predicted a 500 basis-point hike, while four forecast a 250-point hike and one 300.
The bank said inflation readings were above expectations in the third quarter, with the strong course of domestic demand, the stickiness of services inflation and the deterioration in expectations putting upward pressure on inflation.
However, it said the underlying trend in monthly inflation was evaluated as being on course to decline.
Erdogan chose former Wall Street banker Hafize Gaye Erkan as central bank chief after his May re-election. She has led a policy U-turn to relieve an economy strained by depleted FX reserves and surging inflation expectations.
Erdogan's previous support for low interest rates despite surging prices brought on a currency crisis in late 2021 and pushed inflation above 85% last year. Inflation is seen ending this year at 68%.
(Reporting by Can Sezer and Ece Toksabay;Writing by Daren Butler;Editing by Jonathan Spicer)
By Daren Butler and Ece Toksabay
