Federal Reserve Chair Janet Yellen said next week’s referendum in the U.K. on whether to remain in the European Union was a factor in the U.S. 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 U.S. 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 U.S. Treasuries, and weakening the pound. Five opinion polls published this week showed “Leave” supporters ahead.
U.S. Treasury Secretary Jacob J. Lew last week warned of repercussions to the global economy, while Bank of England Governor Mark Carney said a vote to exit might lead to a recession in the U.K.
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 U.K. 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.