The lower rate, which stands at 7.25%, as well as intermediary rates were kept unchanged, it said. The U.S. dollar gained around 26 percent against Turkish lira, nearly 24 percent against Argentine peso, almost 11 percent against Brazil real, more than 7 percent against Russian ruble and around 6 percent against Indian rupee.
Turkey's currency lira has fallen to an all-time low against the US dollar amid fears of economic instability as the country heads toward crucial elections next month.
Dragging on the Turkey market outlook, the lira currency has tumbled to record lows in recent weeks and weakened by more than 20% against the Dollars so far this year and depreciated 70% over the past five years.
The central bank move to raise the late liquidity window (LLW) lending rate from 13.5 percent to 16.5 percent prompted a sharp rally in the value of the lira.
"They will not allow them or give an opportunity", he said.
Win Thin, Global Head of Emerging Market Currency Strategy at Brown Brothers Harriman in NY, said Wednesday's increase was the "bare minimum", and something closer to 20 percent in the top rate would be needed to calm the lira.
The Istanbul bourse said it was taking measures to convert its foreign exchange assets to lira to "fight speculative actions aimed at creating a negative image of Turkey", but it was unclear if this would have any impact on the currency.
The currency has lost 22% of its value in 2018, as fears grow that the government might undermine the powers of Turkey's central bank.
Turkey's lira is in free-fall, losing five percent of its value in one day and adding pressure on the central bank to increase interest rates, which could slow the economy.
He has also made statements that fly in the face of economic orthodoxy, describing interest rates as the "mother and father of all evil" and saying low interest rates help keep down inflation.
Following the statement from Fitch, the lira on Tuesday declined to a fresh historic low of 4.66 against the dollar before bouncing back to 4.63.
Turkish president Erdogan is threatening to take greater control of monetary policy post-election.
Turkish inflation reached 10.85 per cent in April from the same month the year earlier and the economy has been plagued by fears of overheating despite impressive growth.
"Current elevated levels of inflation and inflation expectations continue to pose risks on the pricing behaviour", the central bank said.
Ahead of the elections, Ankara has announced a controversial package of incentives and a tax amnesty, increasing fears about overspending.