The bank lowered its one-week repo rate 325 basis points from 19.75 percent to 16.50 percent.
Turkey's central bank on Thursday slashed its main interest rate by 3.25 percentage points, the second cut in three months.
The bank said the one-week repo rate was slashed to 16.50 percent from 19.75 percent, after a bigger cut in July of 4.25 percentage points.
The Bloomberg consensus had predicted a cut of 2.75 percentage points.
The Turkish lira was at 5.68 to the US dollar, a rise of over 1.1 percent in value towards 1130 GMT after the bank's announcement.
The markets shrugged off the last rate cut and inflation in August dropped from 16.65 to 15.01 percent, a 15-month low, according to official figures published last week.
In the statement accompanying its decision, the bank said the "inflation outlook continued to improve" and that the "moderate recovery in economic activity" continued.