Federal Reserve held off on raising interest rates in June due to the possibility of market turbulence after Brexit and worries about the latest US job report

The Federal Reserve held off on raising interest rates in June due to uncertainty about the US labor market as well as a then-upcoming vote on whether the UK would exit the European Union, according to notes released on Wednesday.

The US central bank last met on 14 and 15 June. It was the Fed’s fourth meeting since it raised interest rates in December. Last year’s hike was the first one in almost a decade. The Fed was expected to raise interest rates four times this year. The forecast has since been adjusted to just two hikes in 2016.

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“Most participants noted that the upcoming British referendum on membership in the European Union could generate financial market turbulence that could adversely affect domestic economic performance,” according to notes from June’s meeting.

The Fed thought “it would be prudent to wait for the outcome of the upcoming referendum in the United Kingdom on membership in the European Union in order to assess the consequences of the vote for global financial market conditions and the US economic outlook”.

A week after the June meeting, when testifying in front of Congress, Federal Reserve chair Janet Yellen repeated that sentiment noting that while it was difficult to predict what might actually happen if the UK decided to leave the EU, the Fed would carefully monitor the situation.

The UK voted to leave the EU on 23 June. On Friday and Monday after the vote, the major US markets suffered their biggest two-day losses in 10 months. They have since recovered, and on Friday, the S&P closed at 2,103.

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“The attitude of US investors appears to [be] skepticism that the UK will ever leave the EU and, if it does, that the global fallout can be largely contained,” said Ian Williams, strategist at Peel Hunt.

Also worrying the Fed was the most recent job report, which found that the US economy had added just 38,000 jobs in May – about 122,000 fewer than expected. The Fed noted that job growth in the US has been slowing over the past few months and attributed May’s disappointing report to the 44-day strike by Verizon workers.

“Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labor market,” the notes said.

The next job report will be released Friday and might include upward revisions to May’s numbers. Last time Verizon workers went on strike, for two weeks in August 2011, the department of labor reported that the economy added no jobs that month. Reports released in the next two months, however, showed a growth of 104,000 jobs.

The cautious tone struck by the Fed during the June meeting implies that there might be no hike when the central bankers next meet on 26 and 27 of July. The target range for the federal funds rate is likely to remain between 0.25 and 0.5% for at least two more months. The Fed will then meet at the end of September, which some say could be too close to the presidential election.

“With uncertainties about the outlook and inflation being lower than desired, it allows us to be a little more patient,” William Dudley, president of the New York Fed and a voting member of the Fed’s policy-setting committee, said Tuesday. Among his reasons for caution were the low inflation and the uncertainty around the EU referendum.

Hours before the notes from the June meeting were released, Federal Reserve governor Daniel Tarullo told the Wall Street Journal that he wants to wait until inflation moves closer to the Fed’s 2% target before voting in favor of another interest rate hike.