Thursday's move by the central bank came hours after Erdogan, a self-described "enemy of interest rates", stated his opposition to any lifting of the rate and blamed the central bank for inflation and high borrowing costs.
Turkey is battling double-digit inflation, which surged to almost 18 percent in August, and a meltdown in the lira which hit a record low of 7.24 against the US dollar a month ago.
The weighted cost of funding as of Tuesday was 19.25 per cent and the median forecast in a Bloomberg survey is for a 325-basis-point hike in the one-week repo rate to 21 per cent on Thursday.
The central bank had drawn sharp criticism for failing to substantially raise interest rates to rein in double-digit inflation and an ailing currency.
Speculation has been growing that the monetary authority will deliver a sizeable interest-rate increase Thursday after it signalled potential action last week to help stem accelerating inflation.
The lira tanked to a dramatic file low of 7.24 to the dollar on August 13 after Trump known as for elevated tariffs on the nation in step with its continued detention of American pastor Andrew Brunson, whom it accuses of involvement in Turkey's 2016 coup strive.
Istanbul-based economist Ozlem Derici Sengul said investors were anxious about the central bank not being able to take such action due to political pressure, so "the move built credibility".
Economists have warned of a possible recession in Turkey after a slowdown in the second financial quarter of 0.9 percent, compared to 1.5 percent in the first quarter of this year.
Turkish companies sit on a net foreign-exchange shortfall of $216 billion, and analysts say they are likely to view any bouts of lira strength as an opportunity to rebuild their dollar reserves, slowing any gains.
Signs of movement in the US-China trade stand-off and a bumper interest rate hike in emerging market trouble spot Turkey sent world shares higher today as risk appetite returned.
Erdogan has been a fierce opponent of raising rates and some investors in the Turkish economy had fears he could be interfering in the central bank's affairs.
"The crucial thing is to restore the confidence of worldwide investors that their policies are on the right track", global economist Eswar Prasad said earlier this month.
And they say Erdogan remains unpredictable in his policies since he was re-elected this year as president with vastly expanded powers.
"Accordingly, the Committee has chose to implement a strong monetary tightening to support price stability", it said. It is meant to be independent but has been coming under increasing pressure from Erdogan.
He also decreed that local property sales, rental contracts and leasing transactions could no longer be conducted in foreign currency, in a fresh bid to buttress the flagging lira.