Federal Reserve officials left interest rates on hold last month as heightened uncertainties about the U.S. labor market and financial stability threatened their outlook, according to minutes of their meeting the week before the U.K. voted to leave the European Union.
The minutes of their June 14-15 meeting show that the Federal Open Market Committee saw it prudent to wait for the result of Britain’s June 23 referendum, which at the time was still too close to call. The decision in favor of Brexit has since sent the pound tumbling and has driven bond yields to record lows.
The committee also weighed the health of the U.S. economy and the long-run trajectory for rate increases. A slowdown in hiring was among their chief concerns and another reason for caution. While “participants generally agreed that it was advisable to avoid overreacting to one or two labor-market reports,” the implications of recent employment data were viewed as “uncertain,” the minutes show. Most officials judged that they needed more information on jobs, production and spending. Read more
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