Turkish Central Bank on Thursday hiked its one-week repo rate by 625 base points.  

In a statement, the bank's Monetary Policy Committee said the policy rate was increased to 24 percent, up from 17.75 percent.  

According to Anadolu Agency's survey on Monday, a group of 17 economists expected a rise in one-week repo rate with a median of 425 base points, i.e. 4.25 percentage points. 

The next two Monetary Policy Committee meetings are to be held on Oct. 25, and Dec. 13.

"Recently released data indicates a more significant rebalancing trend in the economic activity," the bank said. 

"External demand maintains its strength, while slowdown in domestic demand accelerates," it added.

On Monday, the country's statistical authority TurkStat announced that Turkey's economy grew by 5.2 percent in the second quarter of this year compared with the same period last year. 

The Turkish economy's growth rates were 11.5 percent in the third quarter last year, 7.3 percent in the last quarter of 2017, and 7.3 percent in the first quarter of this year.

"Recent developments regarding the inflation outlook point to significant risks to price stability," the bank said, noting that price increases have shown a generalized pattern across subsectors, reflecting the movements in exchange rates.

The U.S. dollar/Turkish lira exchange rate saw harsh fluctuations as lira lost around 40 percent against the dollar since the beginning of this year. 

As of 3 p.m. (1200GMT) Thursday, the exchange rate hovered around 6.20. Last year, the average USD/TRY exchange rate was 3.65 while it was 3.02 on average in 2016.

"Deterioration in the pricing behavior continues to pose upside risks on the inflation outlook, despite weaker domestic demand conditions," the bank said. 

"Accordingly, the Committee has decided to implement a strong monetary tightening to support price stability," it added. 

According to TurkStat, Turkey's annual inflation was 17.90 percent in August, up from July's figure of 15.85 percent. 

Over the past five years, the annual inflation saw its lowest level at 6.13 percent in April 2013, while the figure reached its highest level last month. 

The bank also noted that it will continue to use all available instruments to the price stability.

"Tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement," it said.

In order to achieve targets, the bank added that it will closely monitor a wide range of variables -- inflation expectations, pricing behavior, lagged impact of recent monetary policy decisions, contribution of fiscal policy to rebalancing process, and other factors. 

On Thursday, the bank also announced that the Central Bank funding -- currently provided through overnight lending -- will be provided via one-week repo auctions starting from Sept.14.

"One-week transition period has been envisaged for providing all of the funding via one-week auctions," it said. 

In May, the bank decided to complete a simplification process for the operational framework of its monetary policy, and determined one-week repo rate as its policy rate.