Guillaume Tresca, senior emerging market strategist at Credit Agricole said the economy needed to slow down because it was overheating and that an interest rate rise was needed to cap lira depreciation.
Countering a trend popular within Turkey, especially within the retail sector, the government said any contracts previously made in foreign currency but which were now in effect must be converted into lira within 30 days.
The bank said it was hiking its main interest rate by 625 basis points to 24 per cent, double the market consensus for the raise.
The bank is also fighting a losing battle against inflation with annual consumer price inflation hitting 17.9 percent last month, its highest level since late 2003.
"As of today, I have not seen the central bank fix inflation rates as they promised", Erdogan went on.
The embattled currency has fallen by 40% this year amid a lack of interest rate hikes to control inflation. "If you say 'inflation is cause, the rate is the result, ' you do not know this business, friend".
Erdogan, a self-described "enemy of interest rates", picked his son-in-law, Berat Albayrak, as finance minister in July.
Florence weakens to Category 2 hurricane but still life-threatening: NHC
Emergency Management Division told The State on Thursday. "We're a good community up there". "Time is Running Out". There was also concern over crops. "We hope to have something left when we get home", she said.
Erdogan previous year said the fund needed a "reorganisation" after the first chairman Mehmet Bostan was removed from his post in September 2017.
"Great decision - made all the more hard by the huge pressure on the central bank from Erdogan", said Bluebay Asset Management LLC strategist Tim Ash. "The lira crisis seems to be far from over".
Thursday's decree and Erdogan's remarks come after the lira's drastic fall in value against the U.S. dollar last month, during one of the worst diplomatic rows between North Atlantic Treaty Organisation allies Washington and Ankara.
The currency rose to touch 6.3673 per dollar, the highest since August 29.
The magnitude of the hike was all the more surprising given that just before the decision Erdogan had slammed interest rates as a "tool of exploitation".
"For any property transaction it's the price at the moment of the deal that counts".
One of Erdogan's advisors mainly known for his outlandish statements, Yigit Bulut, was removed from the board, while new members included Rifat Hisarciklioglu, the president of the Union of Chambers and Commodity Exchanges of Turkey (TOBB).
Zafer Sonmez, head of the Turkey regional office of the Malaysian sovereign wealth fund Khazanah Nasional, was named as general manager. Erdogan said last September the fund was to be reorganised after dismissing its chairman over its failure to meet targets.