Trump Can Look at Turkey for Lesson in Fallout of Rates Bashing

(Bloomberg) -- Donald Trump is taking a page out of Recep Tayyip Erdogan’s playbook.

But the lesson from Turkey is, bash the central bank for keeping lending costs too high and higher interest rates is what you get.

Trump broke with decades of tradition that presidents avoid commenting directly on the dollar or the path of U.S. monetary policy when he tweeted Friday that the Federal Reserve’s rate hikes are hurting the American economy.

For more on Trump’s criticism of the Fed, read this.

The dollar and stocks both fell on the comments -- hardly a surprise for those who have followed markets in Turkey, a NATO ally where Erdogan’s complaints about the central bank have sent the currency lower over the years.

Lending costs, which Erdogan insists should come down, have gone from under 5 percent to 17.75 percent in the past five years. According to a Bloomberg survey ahead of the central bank’s July 24 rates decision, the benchmark rate is likely to rise to 18.75 percent next week, which would be the highest level in 14 years.

At the same time, the lira lost more than 60 percent of its value against the greenback -- so Trump would at least get half his wish.

©2018 Bloomberg L.P.