Are Rate Hikes Good or Bad

By Douglas A. McIntyre Updated Apr 27, 4:29PM EDT · Published Jan 12, 3:56AM EST

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From Ticker Sense

To the surprise of all but one economist (out of a poll of over 50), earlier today the Bank of England raised interest rates by 25 bps. The move quickly sent the FTSE 100 down nearly 1% from its intraday highs.

Last week, we asked if investors were missing the bigger picture regarding Fed rate hikes. When the Fed (or any other central bank for that matter) raises interest rates, they are usually doing it as a pre-emptive strike to keep the economy from becoming too overheated and causing inflation. When they cut rates, it is usually meant as a crutch to support a weakening economy. With this in mind, interest rate hikes are not necessarily a bad thing. Which would you rather have — a broken leg that would probably heal just fine with some therapy, or a perfectly healthy leg that simply needs a rest?

Getting back to the Bank of England and the FTSE, it appears that after that initial sell-off this morning, cooler heads prevailed as the index has since recovered its losses (and then some!) from the initial rate decision.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.