Janet Yellen: 'Brexit' vote impact on markets figured in Fed's decision to leave interest rates unchanged

SPH Brightcove Video
The Federal Reserve kept US interest rates unchanged and signals lower rate path going forward.
Janet Yellen speaks during a news conference on June 15, 2016. PHOTO: BLOOMBERG

WASHINGTON (BLOOMBERG) - Federal Reserve chairman Janet Yellen said next week's referendum in Britain on whether to remain in the European Union was a factor in the US central bank's decision to hold interest rates steady at its meeting Wednesday in Washington.

"It is a decision that could have consequences for economic and financial conditions in global financial markets," Yellen said during a press conference following the meeting.

A vote on June 23 by Britons to leave the EU "could have consequences in turn for the US economic outlook," she said.

Growing worries over a potential British exit have roiled financial markets, sending stocks lower around the globe in the past week, pushing investors into safe havens like German bonds and US Treasuries, and weakening the pound.

Five opinion polls published this week showed "Leave" supporters ahead.

US Treasury Secretary Jacob J. Lew last week warned of repercussions to the global economy, while Bank of England (BOE) governor Mark Carney said a vote to exit might lead to a recession in the UK.

The BOE has begun a series of extra market operations aimed at boosting bank funding around the referendum.

European Central Bank Governing Council member Ilmars Rimsevics said last week the bank is prepared to offer euro liquidity.

The UK joined the European Economic Community, a predecessor body to the EU, in 1973. It has the second-largest national economy within the 28-member group, behind Germany.

Join ST's Telegram channel and get the latest breaking news delivered to you.