ISTANBUL--Turkey's central bank verbally intervened to stem the lira's slide as the currency hit record lows against the dollar Friday, seeking to ease fears that policy makers may prematurely cut interest rates despite a broad emerging-markets selloff.

Amid sustained pressure on Turkey's currency Friday afternoon, the central bank said it would "use all policy instruments at its disposal" toward meeting inflation targets, hinting that currency volatility may derail anticipated interest-rate reductions.

"Recent movements in financial markets are not consistent with the degree of caution of the rate cut cycle envisaged by the Central Bank of the Republic of Turkey," policy makers said in a statement shortly before local markets closed.

After the Turkish central bank's statement, the lira pared losses to as little as 0.5% against both the dollar and the euro. But the impact was short-lived, with the lira 1% weaker against the greenback and down 0.9% versus the euro after markets closed in Istanbul. Meanwhile, benchmark two-year bond yields rose to 6.89% from 6.8% before the statement.

The intervention came after a 1.3% drop in the lira to 2.4471 a dollar on Friday, after a surprise rate cut by the Russian central bank and contagion fears sent the broadly flat Turkish currency tumbling to yet another all-time low for a second consecutive day.

The lira also continued its free fall against the euro, weakening by as much as 1.2% to 2.7699 a euro to its lowest in three weeks despite the common currency's decline following the European Central Bank's monetary-easing decision last week.

Turkish central bank Governor Erdem Basci's suggestion on Tuesday that policy makers may convene an emergency meeting on Feb. 4 to cut interest rates has been fueling the lira selloff, now in its sixth day. While some analysts interpreted the central bank's Friday statement as a sign that the governor wouldn't convene an extraordinary meeting, the communique and a central bank spokesman didn't explicitly rule out the option.

"We were quite doubtful about the viability of the meeting, having seen the sharp depreciation in the currency; although we were thinking that political pressure may urge the central bank of Turkey to go for it," said Ozlem Derici, chief economist at Deniz Invest in Istanbul. "It seems that the central bank will wait for the original date of the meeting on February 24th and follow market conditions to better assess whether it is the right time to ease monetary policy."

The lira's slide started in early December, amid signs that the economic recovery in the U.S. would prompt the Federal Reserve to start raising interest rates in a move that threatens to suck money out of emerging markets like Turkey. The sell-off accelerated in mid-January, driven by mounting political pressure on Turkey's central bank to cut interest rates. The lira has slumped 4.4% against the greenback since the beginning of this year and lost nearly 4% since Tuesday.

The government and President Recep Tayyip Erdogan have been pressuring the central bank daily for the past month, saying significant cuts to borrowing costs are needed to stimulate growth in Turkey's slowing $820 billion economy.

"Recently signaled emergency rate cuts were anyway beginning to--mildly--pressure the currency," said Tatha Ghose and Simon Quijano-Evans, London-based Commerzbank AG analysts. "The situation worsened because of a general risk-off tone around the region, perhaps driven by concern surrounding Russia."

Mr. Basci said this week that Turkey's inflation rate is poised to slow rapidly in January, justifying reductions to interest rates. Consumer-prices will increase by an annualized 6.8% in January, according to a survey of seven economists by The Wall Street Journal, down from 8.17% in December.

Before Friday's verbal intervention, many economists--including from J.P. Morgan Chase & Co. and Citigroup Inc.--had said the central bank is on track to cut its policy rate to 7% from 7.75% next week. Mr. Basci had said policy makers may hold an extraordinary meeting to reduce borrowing costs Wednesday if official data Tuesday shows that inflation slowed by more than 1 percentage point in January.

A fresh drop in one-week repo rate would mark the second reduction following a 0.5 percentage point decrease from 8.25% on Jan. 20, when Mr. Basci resumed a monetary policy easing cycle he had halted for five months.

Some government ministers and the president slammed the last decision as "insufficient" to incentivize investments and support tepid economic growth--about 3% last year. On Friday, Economy Minister Nihat Zeybekci dismissed concerns about the lira's free fall, saying currency depreciation should not stand in the way of lower interest rates.

"At the present juncture, interest-rate reductions are already late," Mr. Zeybekci said as the lira slumped to fresh lows against the dollar. "We find it meaningless for Turkey to tolerate high interest rates by acting with apprehension."

Emerging-market currencies came under renewed pressure after Russia's central bank reduced its one-week repo rate to 15% from 17%, surprising markets and causing investors to shun risky assets--including Turkey's currency.

"The lira will remain vulnerable as long as investors perceive that the central bank is submitting to political pressure to cut rates," said Paul McNamara, an emerging-markets bond investor who oversees about $5 billion at GAM, an asset-management firm. "With significant, mostly private foreign debt, loose monetary policy--especially anything that makes effective interest rates close to inflation--poses a significant risk to the currency."

Write to Yeliz Candemir at yeliz.candemir@wsj.com

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