Fed’s interest rate hike is mixed blessing for Malta

Higher interest rates in the US are a mixed blessing for Malta as exports in euros  are likely to become more competitive, but oil purchases will become more expensive. The US Federal Reserve increased interest rates by a quarter of one per cent on Wednesday on the back of an improving economy. The hike may not seem much but according to economist Philip von Brockdorff, senior lecturer at the University of Malta, it is “extraordinary” because it is the first time rates have increased in almost a decade. The decision is likely to see the value of the dollar rise, which would make exports from the eurozone more competitive. “Malta’s exports in euro could become more competitive, which is a boon for the manufacturing sector but on the flip side the rate rise may become an issue for microchip maker ST, which trades in dollars,” Dr Brockdorff said. A stronger dollar could eventually also increase the cost of oil imports since the commodity is traded in the green currency. Crude oil has hit almost $40 per barrel but the downward push as a result of oversupply may be mitigated by a higher exchange rate. However, Dr Brockdorff said the negative impacts may not be immediate because it...