London — Turkish President Recep Tayyip Erdogan is taking on financial markets again, and if history is a guide, he’s going to lose. Erdogan triggered a slump in lira assets this week by reviving his long-standing criticism of conventional central banking, namely, that policy makers should cut interest rates — rather than raise them — to stem soaring inflation. That approach didn’t work in January 2014 when the central bank eventually had to more than double borrowing costs to stem a flight of foreign cash. As the lira plunges toward a record-low of four to the dollar, traders say he’ll be pushed into a corner again if he wants to avoid alienating the very investors he needs to sustain his economy. "Nobody genuinely believes that high interest rates cause inflation, this is populist rhetoric from Erdogan. I’d be very surprised if he himself believes it," said Paul McNamara, a London-based fund manager at GAM UK, which sold all its Turkish holdings months ago. "The lira is going to k...

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