US Federal Reserve officials are monitoring the case of missing Saudi journalist Jamal Khashoggi and the possibility that any sanctions against Saudi Arabia could disrupt oil markets, Atlanta Fed President Raphael Bostic said on Friday.
Asked about the risks to the US economic outlook at a community group lunch in Macon, Georgia, Bostic mentioned geopolitical risks generally, the Brexit talks and “the Saudi Arabian situation and the question about whether what happened to that journalist is going to lead to sanctions that could impact oil markets.”
His comments, the first by a US central banker about the case, reflect how it has escalated from a diplomatic dispute between Saudi Arabia and Turkey to an international incident with the potential to roil financial markets.
Khashoggi went missing after entering the Saudi consulate in Istanbul, Turkey, on Oct. 2 to obtain documents for a forthcoming marriage.
Turkish officials say he was killed in the building, but Riyadh has denied the allegations.
Bostic singled out the possible fallout if the US or other countries determine that top Saudi officials were behind Khashoggi’s possible murder and begin imposing penalties on Riyadh.
“We don’t know what is going to happen, but one thing we will do is monitor the economy and these developments as closely as possible,” Bostic said.
Oil prices on Friday rose about 1 percent on signs of surging demand in China, although the market was headed for a second week of losses on rising US inventories and concern that trade wars were curbing economic activity.
Bostic said he saw little risk to the US economy, which is “chugging along” with very low unemployment and inflation at the Fed’s 2 percent target.
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