ISTANBUL - The Turkish lira weakened 2.5% against the dollar on Thursday after the central bank hiked its key interest rate by 650 basis points to 15% in a reversal of President Tayyip Erdogan's low-rates policy that fell short of market expectations.

The lira hit a record low of 24.25 in a rapid decline that happened around half an hour after the rate decision was announced. The move brought the lira's losses against the U.S. currency this year to near 23%.

(Reporting by Huseyin Hayatsever; Writing by Daren Butler; Editing by Ezgi Erkoyun)