The bank has signalled it will make measured cuts in its main one-week repo and overnight borrowing rates, but the evidence of a slowdown in the Turkish economy has been building for a bank that has not been shy of shifting tack swiftly.
The lira was at 1.7850 to the dollar by 0831 GMT, a touch weaker than 1.7838 late on Monday. Against its euro-dollar basket, it hit 2.0680 in early trade, its weakest level since Nov. 30, from 2.0659.
The yield on the two-year benchmark bond was flat at 5.74 percent.
"The expectations in the market about the rate cuts range between 25-50 basis points. While the majority expect the bank to cut 25 basis points its policy and overnight borrowing rate, there are also some investors who expect a rate cut of 50 basis points," said Tufan Comert, strategist at Garanti Securities.
"We are expecting the bank to cut its policy rate by 25 basis points and the lower end of the interest rate corridor by 50 basis points."
The bank has been reducing its higher overnight lending rate steadily but a cut in the main one-week repo rate - much lower than the lending rate at 5.75 percent - would be the first since August 2011, and a step up in its efforts to bolster the economy.
Officials, however, have already shifted substantially in the past month to all but guaranteeing a "measured" cut in the two other rates and anything more would be a surprise.
"If the statement after the policy meeting is less dovish than expected, the lira can firm below 1.78 to the dollar," wrote Fatih Keresteci in a note.
Istanbul's main share index was up 0.69 percent at 77,994 points, outperforming a rise of 0.18 percent in the global emerging markets index.
"The rebound in equities should spill over into today while having an eye on the central bank announcement in the afternoon where we expect a cut in both policy and floor rate by 25 basis points," wrote analysts at ATA Invest in a research note.
Center>Copyright Reuters, 2012