The main risk to the U.S. economy from the Trump administration’s capture of Venezuela’s leader over the weekend would stem from rising oil prices, Minneapolis Federal Reserve President Neel Kashkari said on Monday, but that does not appear to be underway so far.
The risk is “mostly through oil prices,” Kashkari said in an interview on CNBC. “When Russia invaded Ukraine, it sent a commodity shockwave all around the world. It didn’t happen with Hamas attacking Israel. It has not happened now with the U.S. and Venezuela. But that’s the mechanism that… would directly affect the US.”
“I don’t see it so far,” he added.
In the biggest intervention in Latin America since the 1989 invasion of Panama, U.S. Special Forces over the weekend captured Venezuela’s long-time leader, Nicolas Maduro, and brought him to New York to face drug trafficking charges.
Commodity and financial asset markets so far have shown only a modest response to the surprise development. U.S. light sweet crude oil prices on Monday were about 1% higher but were not far above five-year lows touched in December.
(Reporting By Dan Burns; Editing by Chizu Nomiyama )