But according to Hargreaves Lansdown there may not be much of an historical president to worry about. If we look back history indicates the best strategy is to do nothing. For the last six main periods of Base Rate rises since 1988 Britain’s leading share index, the FTSE 100, has not suffered a severe selloff and for half of the time the index was flat, or posting small losses, and on the other three occasions the market even responded positively.
Laith Khalaf, a senior analyst at Hargreaves Lansdown, who helped compile this data, said: “a period of rising interest rates does not necessarily mean poor returns from the stock market. If a central bank is raising interest rates it is generally doing so to curb economic activity, because it believes the economy is in danger of overheating. In other words, economic growth is strong, which is a positive backdrop for companies to do business in." "There are of course negative impacts on companies from higher interest rates. They have to pay more to borrow money, and if consumers have to pay more for their mortgages, they may have less to spend on goods and services that British businesses sell."
The speed of the interest rate rises is also important and Financial markets are expecting rates to go up slowly and gently rather than jump up overnight.
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