Yellen Says Russia Spillover to US Economy Likely to Be Small

Federal Reserve Chair Janet Yellen said that she and her colleagues discussed Russia’s economic crisis at this week’s policy meeting and agreed it would have little impact on the U.S. economy.

“We discussed what the potential spillovers are to the United States, which could occur both through trade and financial linkages, but these linkages are relatively small,” she said at a press conference after a meeting of the Federal Open Market Committee in Washington.

“U.S. banks’ exposure to Russian residents is really quite small in terms of relative to their capital,” Yellen said. “In terms of the portfolios of U.S. residents, there are Russian securities, but they account for a very small share.”

Russia financial markets have been roiled by U.S. and European sanctions and sliding oil prices, prompting concerns of spillovers to other economies that could hurt the U.S.

The ruble has been battered by oil prices that have dropped to around $56 per barrel from more than $100 in July. The slide led Russia’s central bank to raise interest rates to 17 percent from 10.5 percent this week to aid the currency.

Russia relies on the energy industry for as much as a quarter of economic output, Moody’s Investors Service said in a Dec. 9 report. Economic sanctions by the U.S. and Europe over Russia’s military incursion in Ukraine’s Crimea region have also hit the Russian economy hard.