By Yeliz Candemir 

ISTANBUL--The Turkish lira has slumped toward a record low against the dollar on expectations that the central bank may cut interest rates as soon as next week.

The lira dropped around 0.8% Thursday, as the greenback rose as high as 2.4037 lira, close to its previous record high of 2.4174 on Dec. 16. The Turkish currency also came under pressure against the euro, weakening 0.6% to 2.71 lira.

The yield on two-year benchmark government bonds rose to 6.75% from 6.69% at Wednesday's close. Bond yields rise as prices fall. Turkey's main BIST-100 stock index was down 0.6%.

"There is definitely an expectation that the central bank will cut rates. That has been driving the move," said Phyllis Papadavid, senior global currency strategist at BNP Paribas in London.

"It is important to remember that many emerging market economies are actually benefiting from the lower price of oil, especially importers like Turkey. In the longer term, this will give the economy and the currency some support and will help it find a floor, but in the shorter term it is fair to expect more pressure on the lira ahead of the central bank rate decision."

Turkish Central Bank Governor Erdem Basci said on Tuesday he may convene an extraordinary meeting to cut interest rates next week amid intensified government pressure to boost sluggish economic growth.

If the inflation rate slows by more than one percentage point in January--to about 7%--policy makers could hold an emergency meeting on Feb. 4 to reduce interest rates, he said. Inflation data for January are scheduled for release Feb. 3.

The central bank is scheduled to have its regular monetary policy committee meeting on Feb. 24.

Mr. Basci's warning of a possible imminent rate cut comes just a week after the central bank lowered its one-week benchmark interest rate by 50 basis points for the first time in six months, while holding other rates steady. That policy easing was criticized by the government and President Recep Tayyip Erdogan as "insufficient" to attract investment to the country and boost economic growth.

"We expect an inter-meeting rate cut to be made, with 100 basis points across the corridor as base-case, and risk of a larger cut," said Simon Quijano-Evans and Tatha Ghose, analysts at Commerzbank. "Although the government has effectively 'locked-in' the Central Bank of Turkey's commitment to ease around Feb. 4, we do think that the CBT could still call off the inter-meeting rate cut, for example under sudden forex volatility."

Equity markets across Europe were broadly lower Thursday, reflecting an increase in risk-aversion from investors. The Stoxx Europe 600 was 0.7% lower in early trade. Other emerging market currencies, like the polish zloty and the South African rand, were also trading lower on the day.

The U.S. Federal Reserve on Wednesday confirmed that it would be "patient" so far as raising interest rates was concerned, without indicating whether or not it would postpone such a move.

Sertan Kargin, chief economist at Eczacibasi Securities, said Turkey's central bank will be mindful of an eventual increase in U.S. interest rates and the impact this may have on emerging market currencies.

"The Central Bank Republic of Turkey.... is required to adopt a 'positive real policy rate' to anchor expectations as the stark contrast between the Fed and ECB/BOJ bloc is likely to put emerging market currencies on a dangerous fault-line," he said.

Josie Cox contributed to this article.

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